Banking Jobs Interview

Question: What is BANK? Answer: A bank is a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers with capital deficits to customers with capital surpluses. Question: What are Main Functions of a Bank ? Answer:

� Borrowing money from public by accepting deposits � Lending the borrowed money

Question: What are the Sources of Fund for a Bank ? Answer:

� Paid- Up capital � Reserve fund & undistributed profits � Deposits from public in various accounts � Borrowing from Bangladesh bank & other financial institutions.

Question: How many Specialized Development Banks in Bangladesh? Answer:

• Bangladesh Development Bank Ltd (Bd. Shilpa Bank+Bd. Shilpa Rin Sangstha) • Karmasangstan Bank • Bangladesh Krishi Bank • Rajshahi Krishi Unnayan Bank • Basic Bank Ltd (Bank of Small Industries and Commerce) • Bangladesh Somobay Bank Limited(Cooperative Bank) • Grameen Bank • Ansar VDP Unnyan Bank

Question: How many Foreign Commercial Banks in Bangladesh? Answer: Foreign Commercial Banks

• CITIBANK N.A. • HSBC • Standard Chartered Bank

• Commercial Bank of Ceylon • State Bank of India • Habib Bank • National Bank of Pakistan • Worri Bank • Bank Alfalah

Question: What is CAMELS ratings? Answer: The CAMELS ratings is a supervisory rating of the bank's overall condition used to classify the nation’s banks. This rating is based on financial statements of the bank and on-site examination by regulators. The scale is from 1 to 5 with 1 being strongest and 5 being weakest. The components of a bank's condition that are assessed

• (C) Capital adequacy, • (A) Asset quality, • (M) Management, • (E) Earnings, • (L) Liquidity and • (S) Sensitivity to market risk

Question: What is Clearing House? Answer: A place provides an arrangement by which various representatives of each clearing Bank assemble there each business day to exchange local cheques, drafts, Bill of exchange which are received by them for collection from their customers. Question. What is SWIFT? Answer:

� The Society for Worldwide Interbank Financial Telecommunication ("SWIFT") operates a worldwide financial messaging network which exchanges messages between banks and other financial institutions.

� The majority of international Interbank messages use the SWIFT network. � SWIFT transports financial messages in a highly secure way, but does not hold

accounts for its members and does not perform any form of clearing or settlement. Question: What is Central Bank ? Answer: A central Bank being generally recognized as the bank which constitutes the apex of the monetary and banking structure of its country and which performs as best it can in the national economic interest.

Bangladesh Bank � Bangladesh Bank, the central bank as well as chief authority to regulate country’s

monetary and financial system, � Established vide the Bangladesh Bank Order, 1972 (P.O. No. 127 of 1972) with

effect from 16th December, 1971. � At present it has got 9 branches and those are located at Motijheel, Khulna,

Sadarghat, Bogra, Chittagong, Sylhet, Barisal, Rangpur and Rajshahi in Bangladesh.

Question: What are the Core Functions of Bangladesh Bank? Answer: The core functions of BB are briefly discussed as follows:

1. BB formulates and implements monetary policy aiming at stabilizing domestic monetary value and maintaining competitive external per value of taka for fostering growth and development of country’s productive resources in the best national interest.

2. BB formulates and implements intervention policies in the domestic money market and foreign exchange market. BB intervenes the money market with some policy instruments such as

i. Open market operation (Treasury Bills/Bonds, Repo, reverse Repo Auctions) ii. Variations in Reserve Ratios such as cash reserve requirements (CRR) and

statutory liquidity ratio (SLR) iii. Secondary trading iv. Discounting rate/ bank rate and v. Moral suasion 3. BB monitors and supervises scheduled banks and non-bank financial instructions

(NBFIs) that include off-site supervision and on-site supervision in order to enhance the safety, soundness, and stability of the banking system to ensure banking discipline, protect depositors’ interest and retain confidence in the banking system.

4. BB holds sole responsibility of the management of international reserve representing aggregate of BB’s holding of gold, foreign exchange SDR and reserve position in the IMF;

5. BB, as the central bank of Bangladesh reserves sole responsibility to issue bank note. 6. BB performs as a clearing house for the scheduled banks to clear and settle inter-bank

payment arising through drawing cheque, drafts, bills, etc to one another. 7. BB acts as a banker to the government; 8. BB functions as a lender of the last resort for the government as well as for the

country’s scheduled banks; 9. BB acts as an advisor to the government; 10. BB directs the growth expediting programs for the national interest.

Question. Who is the Governor of Bangladesh Bank? Answer: Dr. Atiur Rahman took the helm of the central Bank of Bangladesh for four year tenure on May 1, 2009 as the 10th Governor of Bangladesh Bank. Question: What is Repo with Bangladesh Bank? Answer:

� Commercial bank gives it’s securities to the Bangladesh bank & takes funds.

� Funds are injected into the market Question. What is Reverse Repo with Bangladesh Bank ? Answer:

� Bangladesh bank gives it’s security paper to the banks & takes fund from commercial banks

� Funds are withdrawn by Bangladesh Bank from the market. Question. What are the Ingredients of Core Capital (Tier I) in Bank? Answer:

� Paid up Capital � Statutory reserve � Dividend equalization A/C � Retained Earnings

Question: What are the Ingredients of Supplementary Capital (Tier II) ? Answer:

� General provision on Unclassified loans � General Provision on Off balance sheet exposure � Exchange Equalization Account

Question: What is Bank Rate? Answer: Interest rate at which a central bank will advance short term loans to commercial banks. Question: What is LIBOR (London Inter Bank Offer Rate) ? Answer: The interest rate that the banks charge each other for loans (usually in Eurodollars). The LIBOR is officially fixed once a day by a small group of large London banks, but the rate changes throughout the day.

Question. What is DIBOR (Dhaka Inter-Bank Offer Rate)? Answer:

� Dhaka inter-bank offer rate (DIBOR), which will help banks get a benchmark interest rate or reference rate.

� In line with the international regulators, the central bank issued a circular in December making the inter-bank offer rate effective from January 01, 2010.

Question. What is European Union (EU)? Answer:

� The European Union (EU) is an economic and political union of 27 member states, located primarily in Europe.

� The euro is the single currency shared by (currently) 16 of the European Union's Member States Question: What is Investment Banking? Answer: Financial institution that provides large amounts of long-term fixed capital, primarily for established firms. Investment banks generally take an equity stake in the borrower firm to exercise some influence on its direction and operations. They also act (often jointly) as financial intermediaries by underwriting the sale of new securities. For example, Investment Corporation of Bangladesh(ICB)