Eduncle posted an Article
August 9, 2019 • 3:10 pm

Banking Interview Preparation Concepts to Avoid Rejection – Part 4




As you know, Interview is not just the stair to get the bank job it is all about your personality, knowledge, pressure handling capability and team interaction. If you are capable to take the quick decision in any situation and your strategy can help to get the benefit, then your chances are getting less to be rejected in Bank Interview.


But, a little knowledge is a dangerous thing. When a person gets some knowledge in a particular field then he/she react as an expert in that field. So, if you are preparing for Bank Interview and want to avoid rejection, then first you need to know everything that can be asked in the Interview regarding Banks.


We have already given you a road map of Bank Interview in Part 1. And, also provided the Basic information of Bank Functions, Accounts in Part 2. Recently we have shared the complete information of Reserve Bank of India in part 3.  Now, it’s time to focus on the Bank Financial System. How it works? In this article, we have discussed the following points: -


Financial Sector

Financial Ratio Analysis with Explanation

Various Payment Systems in Banks in India


Let’s start reading about the Financial Sector!




Financial Sector Regulator in India


India has five financial sector regulator which maintain the financial securities in the market. We have provided a brief description of these financial sector regulators below: -




RBI - Reserve Banks of India


As you know RBI (Reserve Bank of India) play a big role to manage India’s economy and financial stability. It was established on 1st April 1935 as a central bank of India. All the bank (Private & Government) works under the Reserve Bank of India. It has mainly 6 functions: -


Evolution of Central Banking

 Price Stability

 Financial Stability

 Currency and Banking Functions

 Foreign Exchange

 Developmental Functions


Since the establishment, Reserve Bank of has been headed by 25 governors. The term of RBI Governor is three years.


Present Governor of RBI – Shakikanta Das


Headquarter – Mumbai


Know more About RBI




SEBI - Securities and Exchange Board of India


The SEBI was established on 12th April 1992 with an act of provisions of the Securities and Exchange Board of India, 1992.

The main preamble of SEBI describes “To protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto”. Securities and Exchange Board of India has some important power regarding the stoke exchanges: -


To Stock Exchanges & Intermediaries

 To Impose Monetary Penalties

 To Initiate Actions in Functions Assigned

 To Regulate Insider Trading

 Under the Securities Contracts Act

 To Regulate Business of Stock Exchanges


Present Chairman of SEBI - Shri Ajay Tyagi


Head Office - Mumbai, Maharashtra



Download Complete Banking Interview PDF Here




PFRDA - Pension Fund Regulatory and Development Authority


The PFRDA was established on 23rd August 2003 by Government of India.


The Preamble of PFRDA is “To promote old age income security by establishing, developing and regulating pension funds and protects the interests of subscribers to schemes of pension funds and related matters”. The Pension Fund Regulatory and Development Authority has one chairperson with three whole-time members.


Present Chairman of PFRDA - Hemant G. Contractor


Head Office - New Delhi




FMC - Forward Markets Commission


FMC is also a financial sector regulator of India which was established 1953 under the provisions of the Forward Contracts (Regulation) Act, 1952. But on 28th September 2015, the FMC was merged with the SEBI.




IRDA - Insurance Regulatory and Development Authority


It was established in 1999 by the IRDA act of parliament, 1999.


The main mission of Insurance Regulatory and Development Authority is “To protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto."


The Authority of IRDA has ten members team in which one chairman with five whole-time members and four part-time members included.


Present Chairman of IRDA - Subhash Chandra Khuntia


Head Office – Hyderabad


Financial Sector Regulator in India


Know More: - Indian Banking and Financial System




Financial Ratio Analysis with Explanation


A financial ratio is a ratio of calculation and comparison which include the information of financial statement for any organization. This section is mostly asked in general awareness and Interview round. In the banking sector, it is divided into four categories: -




Liquidity Ratios


As we mentioned in the Banking Interview Guide Part 1, liquidity is an ability which works under a short-term obligation (financial system and solvency). And the Liquidity ratio indicates the current ratio, acid test ratio (Quick Ratio), working capital ratio and cash ratio.


Liquidity Ratios Formula Description
Current Ratio Current Asset/Current Liabilities A current asset is an asset or cash that will convert to cash within twelve months.A current liability is an amount which will be paid to loan takers and any other creditors within one year.
Quick Ratio Quick Asset/Current Liabilities As per the name, the quick asset is an asset that will convert to cash quickly.
Working Capital Current Assets - Current Liabilities -
Working Capital Ratio Current Assets/Current Liabilities -
Cash Ratio Cash + Current Investment/Current Liabilities -




Profitability Ratios


One of the most important questions which are generally asked in a banking interview is how to calculate profit and its ratio?


The profitability ratio is divided into 5 categories: -


Profitability Ratios Formula Description
Gross Profit Ratio (Gross Profit/Net Sales) x 100 Gross profit is a profit which will make after deducting the product cost and other investment.Net sales are a total sale a company made.
Net Profit Ratio (Net income/Net Sales) x 100 Income which comes from saving the account, FD, Investment etc is called Net Income.
Return on Asset Net income/Average Assets -
Return on Investment Net income/Long Term Capital Long-Term Capital means long-term liabilities.
Return on Equity Net income/Equity Equity is a value of the company’s shareholder’s fund.




Turnover/ Operational Ratios


You can calculate the turnover ratios in 6 basic ratios: -


Turnover/ Operational Ratios Name Formula Description
Cash Turnover Ratio Net Sales/Cash -
Fixed Assets Turnover Ratio Net sales/ Net fixed assets -
Assets Turnover Ratio Net Sales/Average Total Assets -
Receivables Turnover Ratio Net Sales/Average Receivables Average Receivables include debtors/bills receivables etc
Payables Turnover Ratio Net Purchases/Average Payables Average payables are the accounts payables or the firm’s current liabilities to creditors
Inventory Turnover Ratio Cost of the Goods Sold/Average Inventory Average Inventory is the Stock-in-Trade



Leverage Ratios


It includes 4 basic leverage ratios: -


Leverage Ratios Formula Description
Total Assets to Debt Ratio Total Liabilities/Total Assets -
Debt to Equity Ratio Total Liabilities/Equity -
Interest Coverage Ratio EBIT/Interest Obligations EBIT - Earnings before Interest and Taxes.
Long-Term Debt to Net Working Capital Ratio Total long-term debt/Net WC Net WC (Net Working Capital) = Current Assets - Current Liabilities



Various Payment Systems in Banks in India


As you know, India is one of the fastest growing countries in the banking sector also. There are 130 million cards (Debit Card and Credit Card) issued by the banks. Today, most of the people use credit card/ debit card to pay shopping bills, electric bills, immediate cash etc.


Payment and settlement system is used for these financial transactions via online. In India, Banks provided you various types of facility to payment which are completely secure such as: -


Real-time gross settlement (RTGS)

 National Electronic Funds Transfer (NEFT)

 Nepal Remittance Facility Scheme (NRFS)

 Immediate Payment Service (IMPS)

 Bharat Bill Payment System (BBPS)

 Money Transfer Service Scheme (MTSS)

 Aadhar Enabled Payment System (AEPS)


This is the financial system, ratios and payment system of banks which is generally asked in Bank Interviews. If you want to avoid rejection in banking Interview, then you must know all the details which we have described in our previous parts.


Now, in the next part, we have discussed mutual fund and priority sectors bank.


If you have any doubt regarding this article, you can ask our experts through the comment box. We will definitely try to solve your queries as soon as possible.


Click Here to Read Part 3                                                            Click Here to Read Part 5




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