Eduncle posted an Article
September 26, 2022 • 21:51 pm

Banking Interview Preparation Tips to Avoid Rejection – Part 4


An Interview is not the stair to getting a bank job. It is all about your personality, knowledge, pressure handling capability and team interaction. If you can make quick decisions in any situation, then your chances get less of being rejected in a Bank Interview.

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

We have already given you a road map of the Bank Interview in Part 1. And provided the Basic information on Bank Functions, Accounts in Part 2. Recently we have shared the complete information of the Reserve Bank of India in part 3.  Now, it’s time to focus on the Bank Financial System. How does it work?

In this article, we have discussed the following points: -

Financial Sector

   RBI - Reserve Banks of India

   SEBI - Securities and Exchange Board of India

   PFRDA - Pension Fund Regulatory and Development Authority

   FMC - Forward Markets Commission

   IRDA - Insurance Regulatory and Development Authority

Financial Ratio Analysis with Explanation

   Liquidity Ratios

   Profitability Ratios

   Turnover/ Operational Ratios

   Leverage Ratios

Various Payment Systems in Banks in India 



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Financial Sector Regulator in India


India has five financial sector regulators that maintain the market's financial securities. 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) plays a big role in managing India’s economy and financial stability. It was established on 1st April 1935 as the 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 its establishment, the Reserve Bank has been headed by 25 governors. The term of RBI Governor is three years.

Present Governor of RBI – Shaktikanta Das

Headquarter – Mumbai


Know more About RBI



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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 is “To protect the interests of investors in securities and promote the development of, and 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 - Ms. Madhabi Puri Buch

Head Office - Mumbai, Maharashtra



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PFRDA - Pension Fund Regulatory and Development Authority


The PFRDA was established on 23rd August 2003 by the Government of India. The Preamble of PFRDA is “To promote old age income security by establishing, developing and regulating pension funds and protect 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 - Supratim Bandyopadh

Head Office - New Delhi



FMC - Forward Markets Commission


FMC is also a financial sector regulator of India which was established in 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 the 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 with one chairman five whole-time members and four part-time members included.

Present Chairman of IRDA - Debasish Panda

Head Office – Hyderabad


Know More: - Indian Banking and Financial System



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Financial Ratio Analysis with Explanation


A financial ratio is a ratio of calculation and comparison that includes the information of financial statements for any organization. This section is mostly asked in general awareness and Interview rounds. 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 that 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



Current Ratio

Current Asset/Current Liabilities

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




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Profitability Ratios


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

The profitability ratio is divided into 5 categories: -


Profitability Ratios



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 the total sales a company made.

Net Profit Ratio

(Net income/Net Sales) x 100

Income that 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 the value of the company’s shareholder’s fund.



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Turnover/ Operational Ratios


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


Turnover/ Operational Ratios Name



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



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Leverage Ratios


It includes 4 basic leverage ratios: -


Leverage Ratios



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 people use credit card/ debit cards to pay shopping bills, electric bills, immediate cash, etc.

Payment and settlement system is used for these financial transactions online. In India, Banks provide you various types of facilities for 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)

Unified Payments Interface (UPI)



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Now, at the end of this blog, you are aware of the financial system, ratios, and payment system of banks of India. Questions from these units are generally asked in the Bank interviews. Want to avoid rejection in a banking interview? Then you must know all the details described in our previous parts.

You must check our next blogs, where we have discussed mutual funds and priority sectors bank.

If you have any doubt about this article, you can ask our experts through the comment box. We will reach out to you soon.


Thank You!!



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




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