Banking Interview Preparation Concepts to Avoid Rejection – Part 5

 

 

Congrats! You have covered most of the important topics for banking interview preparation. We hope now, you are fully confident for Banking Interview after reading our previous blogs. But, it does not mean you have finished your preparation. To defeat 99% of the competitors, you only have to ace the interview round.

We have already published the four articles of the Banking Preparation Concept to avoid rejection.

Part 1 -  Principle of Core Banking

Part 2 - Banking Functions and Account

Part 3 - Reserve bank of India

Part 4 - Banking Financial System

Think about it, if you are at the last stage to achieve your goal, but you failed then what will you do? Don’t take the risk! If you want to avoid rejection, prepare all the topics which can be asked in a banking interview exam. There are casual Prelims and Mains attempts but no casual Interview Attempt.

In this blog, we have mentioned the public sector undertaking and mutual fund details.

 

 

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Public Sector Banks

 

To understand what is public sector bank, you need to know about PSU first.

Public Sector Undertaking or PSU play a major role in our Indian Economy. It is a state-owned enterprise in India which is directly maintained by Union Government of India or State or Territorial Government or both. PSU works in our economy since independence.

Banks which are held more than 50% by the government are called Public Sector Bank. There are 21 banks and 1 state-owned payment bank (India Post Payments Bank) which comes under the Public Sector

The list of these banks is given below: -

 

 

 

Download the IBPS Last 5 Years Question paper & Know the difficulty level of exam.

 

 

List of Merged Bank in 2018

 

 

 

Know More: -

Public Sector Bank: Establishment, Headquarters and Taglines

List of CEOs, MDs & Heads of Indian Banks [Updated]

 

 

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Mutual Fund - Definition, Classification, Pros & Cons

 

If you want to avoid rejection in the bank interview then you must know about the investments Indian people make. Mutual funds and SIPs are very important from the interview’s perspective. Read further the what are the commonly asked questions.

What is Mutual Fund?

What are the benefits of Mutual Fund?

What is the structure of Mutual Fund?

How are Mutual Fund Classified?

 

 

Definition of Mutual Fund

 

The word Mutual implies the group of people coming together and fund means putting money, therefore, the term Mutual Fund describes the group of people putting money together to buy stock and bonds or both. These professional funds managed by the manager. A manager analysis the market and provide you many routes in which you can invest your money safely. It is your personal choice which path you want to choose based upon your goal you decide. The manager also ensures the risk is controlled because all stocks may not move in the same direction at the same time.

 

 

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Pros and Cons of Mutual Funds

 

As you know, presently, Mutual Fund in India is the most popular investment scheme which has many advantages and disadvantages. Below, we have mentioned some benefits to invest in a mutual fund: -

It's safe

 Liquidity

 Diversification

 Cost-efficiency

 Automated payments

 Suite your financial goals

 Quick and painless process

 Tax saving under section 80(c)

 Invest in smaller denominations

 A systematic or one-time investment

 Investment easily manages by experts

 Investors can invest in any investment option

 No need to keep updated news of market movements

 

The disadvantage of the Mutual Fund is: -

 High Expense Ratios and Sales Charges

 Management Abuses

 Tax Inefficiency

 Poor Trade Execution

 

 

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Classification of Mutual Fund

 

Mutual Fund is classified into three broad categories: -

 

Portfolio Classification

 Safety of investments

 Capital appreciation

 Modest risk of investment

Volatility in interest rates

Specific income producing security

 Speculative and risky investments

 

Functional Classification

 Open-ended scheme

 Close-ended scheme

 

Geographical Classification

 Domestic funds

 Offshore Funds

 

 

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Structure of Mutual Funds

 

Mainly, the mutual fund is divided into five tired structure: -

Sponsor

 Trustee

 Asset Management Company

 Custodian

 Registrar and Transfer Agent (RTA)

 

Sponsor

A sponsor is basically one person or group of persons who are responsible to float a mutual fund. In other words, you can say that the sponsor is a promoter of a mutual fund. Sponsor has put 40% of share-holding in an asset management company to set up the mutual fund. The sponsor should have a track record and good reputation of fairness in all business transaction. He must have a positive net worth in the last 5 years.

 

Trustee

Trustee is the main body of a mutual fund. It is an independent entity which is responsible to manage and care the investors’ money. The board of trustee appoint by sponsors after the SEBI approval. Generally, 4 trustees include in a mutual fund in which 2-3 trustee works independently.

 

 

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Asset Management Company

Asset management company is the investment company that invests the investor's fund with securities in the market. It is a private company and the directors of AMC works 50% independently. There are many asset management firms in Asia such as: -

Affin Hwang Asset Management Berhad

 Asia Frontier Capital Ltd.

 Capital Dynamics

 Conning & Company

 Global Investment House

 IDFC Project Equity

 IIFL

 Investcorp

 Mirae Asset Group

 Nomura Group

 SinoPac Financial Holdings

 Value Partners

 

To know More Asset Management Company – List of Asset Management Firms in World

 

Custodian

 

Custodian is a financial organization appointed by the trustee. However, sponsor and custodian should be registered with SEBI, but both can never be the same in a mutual fund. The main role of the custodian is holding the safekeeping assets such as bonds, stocks, commodities etc.

 

 

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Registrar and Transfer Agent (RTA)

 

The registrar and Transfer Agent maintain investor details such as documents, investment records, etc. But, it is not compulsory to include an RTA in a mutual fund structure.

 

 

 

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We hope, this article will help you to know about the Public-Sector Undertaking and Mutual Fund, its Benefits, Structure. Many questions are asked from the above-mentioned topics in Bank Interview. So, if you want to avoid rejection in Banking Interview then read carefully and share it with your friends who also prepare for it.

This article will also help the students who want to make their career in mutual fund and who are thinking to invest in mutual fund, but they don’t know anything about it.

Now soon, in the next part, we will discuss more about the banking Interview concepts to avoid rejection.

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 4                                                            Click Here to Read Part 6