Banker interview questions and answers

I start by taking an officially valid document for identity and address, such as a passport, driving licence, voter ID or Aadhaar with the customer’s consent, plus PAN or Form 60. I verify the originals or do an e-KYC or video KYC as the bank allows, and check the customer against sanctions and negative lists in the system. I capture occupation, income range and expected transaction pattern, because that decides the risk category, low, medium or high. Then I upload the record to CKYC or fetch it if the customer already has a KYC identifier. High-risk customers get enhanced due diligence and more frequent re-KYC.

I compare activity with the customer’s profile. Red flags include a student account suddenly receiving many small deposits from different cities and moving them out the same day, cash deposits kept just below reporting limits, or a business account with turnover far above its declared size. I do not question the customer in a way that reveals suspicion, because tipping off is prohibited. I raise an internal alert with details to the branch head and the principal officer, who reviews it and files a suspicious transaction report with FIU-IND if needed. Cash transaction reports above the set limit go separately and automatically through the system.

A loan becomes a non-performing asset when interest or principal remains overdue for more than 90 days for a term loan, or when a cash credit or overdraft account stays out of order for 90 days. Before that, accounts are flagged as special mention accounts: SMA-0 for overdue up to 30 days, SMA-1 for 31 to 60 days and SMA-2 for 61 to 90 days. After becoming an NPA, the asset is substandard for up to 12 months, then doubtful, and loss when the bank judges it uncollectable. Interest on NPAs is not taken as income until it is actually received, and provisions increase as the asset ages.

I start with the business: what it makes, who its buyers and suppliers are and how long its operating cycle is. I analyse three years of financials and the current year’s GST returns and bank statements to confirm turnover. For working capital, I estimate need using the turnover method or the operating cycle, and check the current ratio, debt to equity and interest coverage. I pull credit bureau reports for the firm and promoters. Then I visit the unit to see stock and activity. For a garment exporter I appraised, stock statements looked high, so I checked them physically and set drawing power only on paid stock under 90 days old.

CRR, the cash reserve ratio, is the share of a bank’s net demand and time liabilities it must keep as cash with the RBI, and it earns no interest. SLR, the statutory liquidity ratio, is the share it must hold in liquid assets such as government securities, cash and gold. The repo rate is the rate at which the RBI lends short-term money to banks against securities. If CRR or SLR is cut, banks have more funds to lend. If the repo rate rises, borrowing becomes costlier for banks, and since many loans are linked to an external benchmark such as the repo rate, loan rates for customers go up.

I call and then visit the borrower the same week to find the cause. It might be delayed receivables, a lost order or diversion of funds. I check stock and receivables against the last stock statement. If the problem is temporary, I work out a plan: bringing in promoter funds, collecting a specific receivable to clear overdues, or proposing a restructuring under the applicable framework before the account turns NPA. I update the branch head and log follow-ups in the system. If it still becomes an NPA and the loan is secured, the bank can issue a demand notice under SARFAESI, and for larger amounts approach the Debt Recovery Tribunal.

Priority sector lending is an RBI requirement that banks lend a set share of their adjusted net bank credit to sectors that may not get enough credit otherwise. The categories include agriculture, micro, small and medium enterprises, export credit, education, housing, social infrastructure, renewable energy and others, with sub-targets for small and marginal farmers and weaker sections. If a bank falls short, it has to put the shortfall into funds such as the Rural Infrastructure Development Fund at lower returns, or it can buy priority sector lending certificates. At branch level, this is why we have targets for agriculture and MSME loans, not just retail loans.

I sell only after understanding the customer’s need. For a salaried customer opening a home loan, I explain that term insurance covering the loan protects the family, but I show the premium and say clearly that it is optional and not a condition for the loan. For mutual funds, I do a risk profile first, explain that returns are not guaranteed, and show the product document and charges. I never describe an insurance plan as a fixed deposit. Last quarter I met my third-party target, and I had no complaints, because customers knew exactly what they bought and why it suited them.

A term loan is given for a fixed period for a specific purpose, like buying machinery or a vehicle, and is repaid in instalments. A cash credit is a running working capital limit for businesses, secured by stock and receivables, where the customer can draw up to the drawing power calculated from monthly stock statements. An overdraft is also a running limit, but it is usually given against security such as a fixed deposit, property or salary, and is not tied to stock. In cash credit and overdraft, interest is charged only on the amount used, and the limit is reviewed or renewed each year.

The vault works under dual control, so two authorised officers with separate keys must be present to open it. In the morning, cash is issued to tellers against a register and system entry. During the day I check notes for counterfeits and keep my cash within the teller limit, sending excess to the vault. At day end, I tally physical cash denomination-wise with the system balance, and the officer countersigns. Any shortage is reported immediately, not adjusted quietly. Soiled or suspect notes are handled as per RBI rules. In my branch, we also did surprise cash checks every month, which I think is a good habit.

DSCR is the cash available for debt service divided by the debt service due. Usually it is profit after tax plus depreciation plus interest on term loans, divided by interest on term loans plus principal instalments due in the year. It shows whether the business earns enough to pay its loan obligations. I look at the average DSCR over the loan period and also the lowest year, because one weak year can cause stress. For a hotel project I appraised, the average was comfortable, but the first two years were below 1.2, so we built in a moratorium and a stepped repayment schedule instead of equal instalments.

A senior citizen came in upset because an ATM had not dispensed ₹10,000 but his account was debited, and he had been told to wait. I took him to a desk, offered water and listened fully. I checked the transaction status, saw it was a failed transaction at another bank’s ATM, and raised a complaint in the system with the reference number, which I wrote down for him. I explained that the RBI framework requires automatic reversal within a set time, with compensation to the customer if it is late. I called him back two days later when the amount was credited. He later opened a fixed deposit with us.

Last year, our branch had a CASA target that was 30 percent above the previous year, and I was short by a big margin mid-quarter. I listed all salary accounts in our area and found three mid-size companies that paid staff through other banks. I met their HR heads, offered on-site account opening camps with proper KYC, and set up a helpdesk for two days in each office. We opened 140 salary accounts in six weeks. I made sure every form was complete before submission, so none were rejected by operations. I ended the quarter at 108 percent of my target.

A man presented a cheque for ₹3.8 lakh drawn on a current account of a local shop. The signature looked close to the specimen, but the cheque leaf number was from a series that the system showed as issued months earlier, and the account holder rarely wrote cheques above ₹50,000. I put the cheque on hold politely, saying it needed officer verification, and my manager called the account holder, who confirmed he had not issued it. The cheque book had been stolen from his shop. We stopped the remaining leaves, the customer filed a police complaint, and the branch reported the attempt as per procedure.

A relationship manager wanted a ₹1.5 crore limit for a trader, stressing that the customer would move his whole business to us. When I reviewed it, the GST returns showed turnover about 40 percent lower than the audited accounts, and his bank statements had frequent cheque returns. I did not block it outright. I wrote a note listing the gaps and asked for reconciled turnover and an explanation for the returns. The customer could not explain the difference, so we offered a smaller limit backed by a fixed deposit. Six months later, the trader defaulted with another bank, and the relationship manager thanked me.

During my internship at a bank branch, the officer handling account opening went on leave in my second week, and I was asked to help with the new tablet-based onboarding app. I spent the evening going through the user manual and practised on the training module. The next day I shadowed a colleague for two accounts, then handled them myself with her checking my entries. I kept a small notebook of errors I saw, such as address format issues that caused rejections. By the end of the week I was processing about eight accounts a day with no rejections, and I shared my notes with the next intern.

At quarter end, our branch had two officers on leave and heavy footfall from tax payments, loan renewals and fixed deposit renewals. I suggested we split the day: mornings for walk-in customers at all counters, afternoons for back-office work like renewals and stock statement checks. I took the renewals list and called customers in advance so they came with documents. I stayed an extra hour for three days to clear pending account openings, but I did not skip any KYC step to go faster. We finished all renewals on time, and no accounts slipped into irregular status because of pending paperwork.

I looked at where your bank is growing. You have been opening branches in semi-urban areas of Maharashtra and have a strong MSME and agriculture book, which is the kind of lending I want to learn. I grew up in a small town near Nashik, speak Marathi and Hindi, and understand how small traders and farmers think about credit. A fintech would teach me digital products, but I want to learn credit and relationships from the ground up, including branch operations. Your training programme for new officers also covers credit and operations, which I think will build a stronger foundation.

Yes. I understand that transfers are part of a banking career, especially in the first few years, and that rural postings are where officers learn agriculture lending, government schemes and how to run a branch with a small team. I lived in a hostel for four years during college, so I am used to adjusting to a new place. I would ask only for reasonable notice before a transfer so I can hand over properly. I see a rural posting as a chance to learn things I would not see in a large city branch, and it will make me a better officer later.

My current CTC is ₹9.2 lakh with about 15 percent variable, and I have achieved over 100 percent of my targets in four of the last six quarters. For this relationship manager role, with a larger portfolio, I am expecting a fixed component of around ₹10.5 lakh, with the variable on top as per your policy. I am comfortable with variable pay, because I have a steady record of meeting targets through repeat customers and referrals rather than one-off pushes. If the fixed part is lower, I would want to understand the incentive structure clearly before deciding.