Possible interview questions

1. What is BIAN and what are the BIAN Standards.

(BIAN) Banking Industry Architecture Network is an independent, member owned, not-for-profit
association to establish and promote a common architectural framework for enabling banking
interoperability. It was established in 2008. BIAN's goal is to establish a semantic framework to
identify and define IT services in the banking industry.

BIAN SERVICE LANDSCAPE 5.0

CRUDAL – Create, Read, Update, Delete, Activate and List for any functionality is as per BIAN
standards.
SOA – Service oriented Architecture. The basic principles of service-oriented architecture are
independent of vendors, products and technologies. A service is a discrete unit of functionality
that can be accessed remotely and acted upon and updated independently, such as retrieving a
credit card statement online.

2. Headings of HLR and BRD

HLR
Name of the HLR For e.g. 650 – Reminders
Revision History
Contents
a. Introduction
Description and References
b. Requirement Overview
c. High level use case model
d. Business process overview
GUI Sketches
e. Out of scope
f. Analysis results
a. Use case model
b. Identified use cases
c. Prototypes (IXD – IX Designers)

BRD

1. Introduction

Document purpose

Statement of Business need

2. Project scope statement

 Project inclusion stmt

Proj exclusion stmt

Scope control stmt

3. User characteristics

4. Requirement list

5. FIS Requirements

6. Assumptions and Constraints

7. Open issues

8. Anticipated functional impact.

Impacts to related Project

Impacts to related system

Impacts to companion area

Impacts to 3rd party vendors

9. Appendix

Terminology

References

Distribution list

Version history

3. Difference between functional requirements and Non-func. Requirements.

Functional requirements
Any requirement which specifies what the system should do.
In other words, a functional requirement will describe a particular behaviour of function of the
system when certain conditions are met, for example: “Send email when a new customer signs
up” or “Open a new account”.
A functional requirement for an everyday object like a cup would be: “ability to contain tea or
coffee without leaking”.

Non-functional requirements
Any requirement which specifies how the system performs a certain function.
In other words, a non-functional requirement will describe how a system should behave and
what limits there are on its functionality.
 Non-functional requirements generally specify the system’s quality attributes or characteristics,
for example: “Modified data in a database should be updated for all users accessing it within 2
seconds.”

4. What is a Use case and elements of it.

A use case is a list of actions or event steps typically defining the interactions between a role
(known in the Unified Modeling Language as an actor) and a system to achieve a goal. The actor
can be a human or other external system.

Elements:
• General – Introduction and Descriptions
• Actor – Primary and Secondary
• Requirements – Business rules, Functional rules and Out of scope items etc.
• Constraints – Pre-conditions, Success constraints etc.
• Scenarios – Action/steps followed by Alternates and exceptions etc.
• Input and Output field list
• Connectors such as Include, exclude etc.

5. Requirement Traceability Matrix.

The Requirements Traceability Matrix (RTM) is a document that links requirements throughout
the validation process. The purpose of the Requirements Traceability Matrix is to ensure that all
requirements defined for a system are tested in the test protocols.

6. What are the Top trends in Banking 2017

• Banks Collaborating with FinTechs
• API Economy - Open APIs enable banks to integrate their products and services with
third-party applications to provide customers a variety of products or
services through the banking ecosystem and can also be monetized, in many cases
• Bank as a Platform
• Cybersecurity
• IT Spending for Public Cloud Services
• Augmented Reality Use cases
Banks are investing in augmented reality (AR), as it will enable them to
deliver seamless solutions to customers and also provide an opportunity
for banks to stand out from the crowd.
• Blockchain Timeline – Distributed Ledger Technology
• Cognitive Banking
Artificial Intelligence (AI) and cognitive technology enable banks to
speed up its digitization initiatives and provide targeted, customized
products and services.
• Robotic Process Automation. Eg. Chat boats, Loanbot etc.
• Biometric Authentication Methods
Banks are using Biometric Authentication Tools to Combat Identity Theft and Fraud.
Biometric authentication will help banks to combat identity theft, make
 transactions more secure, and enhance the customer experience.

7. What is System testing, functional testing.

Functional Testing: Functionality testing is performed to verify that a software application
performs and functions correctly according to design specifications. During functionality testing
we check the core application functions, text input, menu functions and installation and setup
on localized machines, etc.

System Testing:
System testing is the testing of a complete and fully integrated software product.
Usually software is only one element of a larger computer based system. Ultimately, software is
interfaced with other software/hardware systems.
System testing is actually a series of different tests whose sole purpose is to exercise the full
computer based system.

8. What are the various techniques we use for requirement gathering.

• Brainstorming
• Document Analysis
• Focus Group
• Interface Analysis
• Interview
• Observation
• Prototyping
• Requirements Workshop
• Reverse Engineering
• Survey

[Link]
requirements-gathering/

9. Difference between Use case and Test case.

A use case captures business and user requirements related to system functions—that is, how
the users interact with the system. The goal of a use case is to help the development team
understand precisely what the users will expect the system to do.

A use case describes all the possible paths through a given user/system interaction, including
the basic path and any alternative or exception paths. The basic (or "happy") path is the one
that meets the user's needs. "Alternative paths" are additional paths that are acceptable but
aren't the most common, frequent, or desirable. "Exception paths" are those that fail to meet
the user's needs because of errors like missing information or invalid data. A single use case may
describe many different paths.

Test cases are used to validate that the requirements have been met. The quality assurance
analyst will probably want to test the system thoroughly by setting up an individual test case for
 each path described in a use case. At a minimum, they would set up separate test cases for the
"happy path," each alternative path, and each exception path. There would probably also be
multiple test cases for the happy path—one for each situation that would cause different
business rules to be invoked.

Use cases are provided to developers so that they can develop the solution, and test cases are
provided to testers so that they can validate that the solution matches the requirements. Thus,
use cases often supply input for developing test cases. But while the two documents may
overlap quite a bit, they aren't exactly the same thing.

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10. what is SDLC and what are the various stages of SDLC?
The SDLC adheres to important phases that are essential for developers, such as planning,
analysis, design, and implementation, and are explained in the section below. It includes
evaluation of present system, information gathering, feasibility study and request approval.

There are following six phases in every Software development life cycle model:

• Requirement gathering and analysis.

• Design.
• Development/coding.
• Testing
• Deployment.
• Implementation and Maintenance.

11. Tell us the differences between Agile and Waterfall and V Model.

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Waterfall model:
Every software developed is different and requires a suitable SDLC approach to be followed
based on the internal and external factors. The Waterfall model can essentially be described as a
linear model of software design. Like its name suggests, waterfall employs a sequential design
process. Development flows sequentially from start point to end point, with several different
stages: Requirement Analysis, Design, Implementation, Testing, Deployment and Maintenance.

Agile Model:
Agile method proposes an incremental and iterative approach to software design. It was
essentially developed in response to the limitations of Waterfall, as a way to give designers
more freedom. There is no pre-determined course of action or plan with the Agile method.
Customer interaction is the backbone of Agile methodology, and open communication with
 minimum documentation are the typical features of Agile development environment. The agile
teams work in close collaboration with each other and are most often located in the same
geographical location.

V-model:
The V model (Validation & Verification model) is a modified version of the Waterfall method.
In V model, based on the requirements the System test cases are prepared, and based on the
HLD (High level document)the Integration Test cases are prepared, and based on the LLD(Low-
level document)the Integration Test cases are prepared. And then the coding is done. Once
coding is completed, unit, integration and system testing happens in the sequence.
In V-model, gives relationship between each development stages and Testing stages.

12. What is a Change request and how do you handle it.

Normally change request are handled by preparing an Impact analysis document and then doing
Re-Estimation. Example you have an ongoing project, which has a customer table. Now
customer wants to also have addresses assigned to it. So you normally raise a change request
and then do an impact analysis of the same.
• Depending on the impact you estimate and let know the client about the financial
aspect of the project.
• Once client sign off or the upper management agrees to the change request you move
ahead with implementation.

13. Talk me through an interesting story you have read in today’s Financial Times.

14. Where do you see yourself in 3 to 5 years’ of time.

15. What do you know about our Company?/Why do you want to work with us?
SunGard was an American multinational company based in Wayne, Pennsylvania, which
provided software and services to education, financial services, and public sector organizations.
It was formed in 1983, as a spin-off of the computer services division of Sun Oil Company. The
name of the company originally was an acronym which stood for Sun Guaranteed Access to
Recovered Data, a reference to the disaster recovery business it helped pioneer. SunGard was
ranked at 480th in the U.S. Fortune 500 list in the year 2012

In August 2015, FIS announced that it had signed a definitive agreement to acquire SunGard.

16. What is the difference between accrued interest and compound interest.
Compound interest is interest on unpaid interest. 10% on 1000 is 100 interest. If the 100 is not
paid, then next year’s interest is 100 on 1000 and 10 on 1oo, a total of 100 interest in yr-2.
Accrued interest is unpaid interest. In the above example accrued interest at yr-1 is 100. Interest
owed at end of yr-2 is 100+110 = 210. If this remains unpaid at YE-2, then accrued interest at YE-
2 is 210.
 17. Loans and Leasing
A LOAN requires, in most instances, the borrower to invest a down payment that may be as
much as 20% or more of total cost, in the equipment. The loan finances the remaining amount.
A LEASE normally requires no down payment and finances the total value of the equipment plus,
in many instances, other soft costs to include shipping, installation and training.

A LOAN normally requires extensive documentation to include a master loan agreement,

promissory note, board resolution, personal guarantee(s) etc. Regarding credit approvals,
depending on the dollar size of the request, such a decision may take up to 3 weeks or more in
duration.
A LEASE documentation package is usually very simple relative to other forms of financing to
include that of a loan. Regarding credit approvals, small ticket applications up to $200,000,
normally are achieved within 24 hours with those requests over that amount, within 5 -7
business days

A LOAN, according to the Financial Accounting Standards, is required to appear as an asset with
the liability on the borrower’s balance sheet. Such liability impacts financial statement ratios,
thus is taken into consideration by lenders when evaluating the borrowers request for additional
financing.
A LEASE may require the same treatment as that of a loan, unless the lease meets the Financial
Accounting Standards guidelines for an operating lease. If the lease meets the operating lease
guidelines, the obligation may only appear as a footnote within the financial statements. Thus,
the lease obligation should not have any negative impact regarding financial ratios.

[Link]
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18. Loan life cycle

1. Application

The application process has several purposes:

▪ Obtaining the basic information from the Applicant/Borrower that the lender needs to
underwrite the loan according to its standards and to reach a decision on whether to grant the
loan
▪ Pre-qualify applicant for ability to repay a loan
▪ Explain how a Purchase Contract works and how to fill in the appropriate information.

2. Processing

Loan processing includes the collection and verification of detailed information on the Borrower and on
the real estate transaction itself. The Lender is primarily interested in two things: the subject property,
and your financial situation (which includes your credit history.) The process gathers the information to
help determine your ability and your desire to repay the loan.

3. Underwriting

The mortgage loan file next enters the underwriting stage. Loan underwriting is a process that
determines whether the loan is a good risk for the lender.

▪ The main task during the underwriting stage is to avoid as many undue risks as possible

Deciding whether to grant a Borrower's request for a loan is perhaps the most difficult stage of making a
loan.

• Approval
• Commitment Letter

4. Loan Closing

If the loan is approved, the final stage in creating the mortgage loan is the funding and loan closing.
In loan closing, the final details of the loan transaction are completed and the loan funds are disbursed.

5. Servicing

Loan Servicing includes all activities that occur from the time a loan is closed until the time it is repaid.
Servicing activities help ensure that the loan is repaid in a timely manner and that the lenders' legal
claim to repayment of the funds is maintained.

19. Loans origination system

Loan origination is the process by which a borrower applies for a new loan, and a lender processes that
application. Origination generally includes all the steps from taking a loan application up to disbursal of
funds (or declining the application). For mortgages, there is a specific mortgage
origination process. Loan servicing covers everything after disbursing the funds until the loan is fully paid
off.

Types of loans: Secured and Unsecured loans

A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral.
A mortgage loan is a very common type of loan, used by many individuals to purchase things. In this
arrangement, the money is used to purchase the property. The financial institution, however, is given
security – a lien on the title to the house – until the mortgage is paid off in full. If the
borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to
recover sums owing to it.
Unsecured
Unsecured loans are monetary loans that are not secured against the borrower's assets. These may be
available from financial institutions under many different guises or marketing packages:

• credit card
• personal loans
• bank overdrafts
• credit facilities or lines of credit
• corporate bonds (may be secured or unsecured)
• peer-to-peer lending
The interest rates applicable to these different forms may vary depending on the lender and the
borrower. Interest rates on unsecured loans are nearly always higher than for secured loans, because an
unsecured lender's options for recourse against the borrower in the event of default are severely
limited.
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Loan payment
The most typical loan payment type is the fully amortizing payment in which each monthly rate has the
same value over time.
The fixed monthly payment P for a loan of L for n months and a monthly interest rate c is:

20. Journal entries for loan disbursal

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21. Journal entries for loan closure

Refer above last two

22. Leasing and various types of leasing in India

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22. Leasing and various types of leasing in India

As per Wiki

A lease is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an
asset. Property, buildings and vehicles are common assets that are leased. Industrial or business
equipment is also leased.

Leasing: Definitions, Types, Merits and Demerits!

A “lease” is defined as a contract between a lessor and a lessee for the hire of a specific asset for a
specific period on payment of specified rentals.

The maximum period of lease according to law is for 99 years. Previously land or real resate, mines and
quarries were taken on lease. But now a day’s plant and equipment, modem civil aircraft and ships are
taken.

(i) Lessor:
The party who is the owner of the equipment permitting the use of the same by the other party on
payment of a periodical amount.

(ii) Lessee:

The party who acquires the right to use equipment for which he pays periodically.

Types of Leases:The different types of leases are discussed below:

1. Financial Lease:

This type of lease which is for a long period provides for the use of asset during the primary lease period
which devotes almost the entire life of the asset. The lessor assumes the role of a financier and hence
services of repairs, maintenance etc., are not provided by him. The legal title is retained by the lessor
who has no option to terminate the lease agreement.

2. Operating Lease:

It is where the asset is not wholly amortized during the non-cancellable period, if any, of the lease and
where the lessor does not rely for is profit on the rentals in the non- cancellable period. In this type of
lease, the lessor who bears the cost of insurance, machinery, maintenance, repair costs, etc. is unable to
realize the full cost of equipment and other incidental charges during the initial period of lease.

The lessee uses the asset for a specified time. The lessor bears the risk of obsolescence and incidental
risks. Either party to the lease may termite the lease after giving due notice of the same since the asset
may be leased out to other willing leases.

3. Sale and Lease Back Leasing:

To raise funds a company may-sell an asset which belongs to the lessor with whom the ownership vests
from there on. Subsequently, the lessor leases the same asset to the company (the lessee) who uses it.
The asset thus remains with the lessee with the change in title to the lessor thus enabling the company
to procure the much needed finance.

4. Sales Aid Lease: Under this arrangement the lessor agrees with the manufacturer to market his
product through his leasing operations, in return for which the manufacturer agrees to pay him a
commission.

5. Specialized Service Lease:

In this type of agreement, the lessor provides specialized personal services in addition to providing its
use.

6. Small Ticket and Big Ticket Leases:

The lease of assets in smaller value is generally called as small ticket leases and larger value assets are
called big ticket leases.

7. Cross Border Lease

Lease across the national frontiers is called cross broker leasing. The recent development in economic
liberalisation, the cross border leasing is gaining greater importance in areas like aviation, shipping and
other costly assets which base likely to become absolute due to technological changes.

23. Various types of leasing in USA

Refer above

24. Leasing software products

Software for Managing Any Loan, Lease or Asset Anywhere

Cassiopae, a Sopra Banking Software company, is a global leader in finance and asset management
software. We have been helping businesses reduce operating costs, cost of ownership, and risk for over
25 years. Today, 500 customer sites on 5 continents are using Cassiopae solutions to help manage their
front-to-back lending, leasing, real estate asset, and fleet management portfolios.

We provide solutions that business and IT can agree on and a network of 500 experienced professionals
and partners worldwide.

Cassiopae Commercial Lending

Cassiopae Consumer Finance

Cassiopae Auto Finance & Fleet Management

Cassiopae Equipment Finance

Cassiopae Real Estate Asset & Property Management

FIS’ Ambit Asset Finance Managed Services provide customers around the globe with outsourced
infrastructure, secure network connectivity, and operations management together with technical and
application management services by leveraging FIS’ leadership in managed services and renowned
disaster recovery expertise and through the adherence to industry accredited delivery frameworks and
best practices.

Ambit Asset Finance Managed Services reduce the total cost of ownership (TCO) by decreasing and
securing direct and indirect IT and application administration costs under a long term, predictable
pricing agreement. Our service delivery model ensures a single point of contact for all IT support and
application management requirements.

HSBC Deploys SunGard’s Ambit Leasing & Asset-Based Finance Solution to Support Growth Strategy in
2010

25. Agile Methodology

26. Complete Agile flow

Agile method proposes an incremental and iterative approach to software design. It was essentially
developed in response to the limitations of Waterfall, as a way to give designers more freedom. There is
no pre-determined course of action or plan with the Agile method. Customer interaction is the
backbone of Agile methodology, and open communication with minimum documentation are the typical
features of Agile development environment. The agile teams work in close collaboration with each other
and are most often located in the same geographical location.

SCRUM is a process in agile methodology which is a combination of Iterative model and incremental
model.

One of the major handicaps of the traditional water-fall model was that – until the first phase is
complete, the application does not move to the other phase. And if by chance there are some changes
in the later stage of the cycle, it becomes very challenging to implement those changes, as it would
involve revisiting the earlier phases and redoing the changes.

Some of the key characteristics of SCRUM include:

• Self-organized and focused team

• No huge requirement documents, rather have very precise and to the point stories.
• Cross functional team works together as a single unit.
• Close communication with the user representative to understand the features.
• Has definite time line of max 1 month.
• Instead of doing the entire “thing” at a time, Scrum does a little of everything at a given interval
• Resources capability and availability are considered before committing any thing.
• To understand this methodology well, it’s important to understand the key terminologies in
SCRUM.

Important SCRUM Terminologies:

1. Scrum Team

Scrum team is a team comprising of 7 with + or – two members. These members are a mixture of
competencies and comprise of developers, testers, data base people, support people etc. along with the
product owner and a scrum master. All these members work together in close collaboration for a
recursive and definite interval, to develop and implement the said features.

SCRUM team sitting arrangement plays a very important role in their interaction, they never sit in
cubicles or cabins; but a huge table.

2. Sprint

Sprint is a predefined interval or the time frame in which the work has to be completed and make it
ready for review or ready for production deployment. This time box usually lies between 2 weeks to 1
month. In our day to day life when we say that we follow 1-month Sprint cycle, it simply means that we
work for one month on the tasks and make it ready for review by the end of that month.

3. Product Owner

The product owner is the key stakeholder or the lead user of the application to be developed.

The product owner is the person who represents the customer side. He/she have the final authority and
should always be available for the team. He/she should be reachable in case any one has any doubts
that need clarification. It is important for the product owner to understand and not to assign any new
requirement in the middle of the sprint or when the sprint has already started.
4. Scrum Master

Scrum Master is the facilitator of the scrum team. He/she make sure that the scrum team is productive
and progressive. In case of any impediments, scrum master follows up and resolves them for the team.
SCRUM Master is the mediator between the PO and the team. He / She keeps the PO informed about
the progress of the Sprint. If there are any roadblocks or concerns for the team, discuss with the PO and
get them resolved. Like team’s Daily Standup, a standup of the SCRUM Master with the PO happens
every day.

5. Business Analyst (BA)

A BA plays a very important role in SCRUM. This person is responsible for getting the requirement
finalized and drafted in the requirement docs (based on which the user stories are created). If there are
any ambiguities in User Stories / Acceptance criteria, he/she is the one approached by the technical
(SCRUM) team who then takes it up to the PO else if possible resolves on his own. In large scale projects
there may be more than 1 BA but in small scale projects, the SCRUM Master may be acting as the BA as
well. It is a good practice to have a BA when a project kick starts.

6. User Story

User stories are nothing but the requirements or feature which has to be implemented. In scrum, we
don’t have those huge requirements documents, rather the requirements are defined in a single
paragraph, typically having the format as:

As a <User / type of user>

I want to <Some achievable goal / target>

To achieve <some result or reason of doing the thing>

For example:

As an Admin I want to have a password lock in case user enters incorrect password for consecutive 3
times to restrict unauthorized access.

7. Epics

Epics are equivocal user stories or we can say these are the user stories which are not defined and are
kept for future sprints. Just try to relate it with life, imagine you are going for a vacation. Since you are
going next week, you have everything in place like your hotel bookings, sightseeing, travelers check etc.
But what about your vacation plan for next year? You have only a vague idea that you may go to XYZ
place, but you have no detailed plan.

An Epic is just like you next year’s vacation plan, where you just know that you may want to go, but
where, when, with whom, all these details you have no idea at this point of time.

In a similar way, there are features which required to be implemented in future whose details are not
yet known. Mostly feature begins with an Epic and then broken down to stories which could be
implemented.

8. Product Backlog
Product backlog is a kind of bucket or source where all the user stories are kept. This is maintained by
the Product owner. Product backlog can be imagined as a wish list of the product owner who prioritizes
it as per business needs. During planning meeting (see next section), one user story is taken from the
product backlog, the team does the brainstorming, understands it and refine it and collectively decides
which user stories to take, with the intervention of the product owner.

9. Sprint Backlog

Based on the priority, user stories are taken from the Product Backlog one at a time. The Scrum team
brainstorms on it determines the feasibility and decides on the stories to work on a particular sprint. The
collective list of all the user stories which the scrum team works on a particular sprint is called s Sprint
backlog.

10. Story Points:

Story points are quantitative indication of the complexity of a user story. Based on the story point,
estimation and efforts for a story are determined. A story point is relative and is not absolute. To make
sure that our estimate and efforts are correct, it’s important to check that the user stories are not big.
Precise and smaller is the user story, accurate will be the estimation.

Each and every user story is assigned a story point based on the Fibonacci series (1, 2, 3, 5, 8, 13&21).
Higher is the number, complex is the story.

To be precise

If you give 1 / 2 / 3 story point it means the story is small and of low complexity.

If you give points as 5 / 8, it is a medium complex and

13 and 21 are highly complex.

Here complexity consists of both development plus testing effort

11. Burn down chart

Burn down chart is a graph which shows the estimated v/s actual effort of the scrum tasks.

It is a tracking mechanism by which for a particular sprint; day to day tasks are tracked to check whether
the stories are progressing towards the completion of the committed story points or not.

Burn Down Chart steps would be:

Enter all the stories ( Column A5 – A15)

Enter all the Tasks ( Column B5 – B15)

Enter the Days ( Day 1 – Day 10 )

Enter the starting efforts (Sum the tasks C5 – C15 )

Apply formula to calculate the “Estimated Efforts” for each day (Day 1 to Day 10). Enter the formula at
D15 (C16-$C$16/10) and drag it for all the days.
For each day, enter the actual efforts. Enter the formula at D17 (SUM (D5:D15)) for summing up the
actual efforts left, and drag it for all the other days.

Select it and create the chart as follows:

12. Velocity

A total number of story point which a scrum team archives in a sprint, is called Velocity. The Scrum team
is judged or referenced by its velocity. Having said that, it should be kept in mind that the objective here
is NOT achieving the maximum story points, but to have quality deliverable, respecting scrum team’s
comfort level.

Definition of Done:

A Sprint is marked as Done when all the stories are completed, all dev, research, QA tasks are marked
‘Completed’, all bugs are fixed-closed else the ones that can be done later (like not completely related or
are less important) are pulled out and added in the backlog, the code reviews and unit testing is
completed, the estimated hours have met the actual hours put up in the tasks and most importantly a
successful demo has been given to the PO and the stakeholders.

Activities done in SCRUM Methodology:

1: Planning meeting

2: Execution of sprint tasks

3: Daily Standup

4: Review meeting

5: Retrospective meeting

27. Reasons for change

28. Compound interest

Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other
words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that
interest in the next period is then earned on the principal sum plus previously-accumulated interest.
Compound interest is standard in finance and economics.

netsh wlan show profiles

29. Repo rate and reverse repo rate

Policy Repo Rate : 6.00%

Reverse Repo Rate : 5.75%

Marginal Standing Facility Rate : 6.25%

Bank Rate : 6.25%

Reverse Repo rate is the rate at which RBI borrows money from the commercial banks. The increase
in the Repo rate will increase the cost of borrowing and lending of the banks which will discourage
the public to borrow money and will encourage them to deposit

Definition: Repo rate is the rate at which the central bank of a country (Reserve Bank of
India in case of India) lends money to commercial banks in the event of any shortfall of
funds. Repo rate is used by monetary authorities to control inflation.
Definition: Reverse repo rate is the rate at which the central bank of a country (Reserve Bank
of India in case of India) borrows money from commercial banks within the country. It is a monetary
policy instrument which can be used to control the money supply in the country.

30. NPA – Different stages of NPA

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Non-Performing Assets are popularly known as NPA. Commercial Banks assets are of various types.

All those assets which generate periodical income are called as Performing Assets (PA).

While all those assets which do not generate periodical income are called as Non-Performing Assets
(NPA).

If the customers do not repay principal amount and interest for a certain period of time then such
loans become non-performing assets (NPA). Thus non-performing assets are basically non-
performing loans.

In India, the time frame given for classifying the asset as NPA is 180 days as compared to 45 days to
90 days of international norms.

In India, NPA were very high in the beginning of 90's. Over a period of time there is considerable
decline in the NPA's of all banks. In the case of public sector banks, gross non-performing assets
were 9.4% in 2002-03 and it declined to 7.8% in 2003-04. The net NPA during the same period
declined from 4.5% to 3%.

square Types of NPA

NPA have been divided or classified into following four types:-

Standard Assets : A standard asset is a performing asset. Standard assets generate continuous
income and repayments as and when they fall due. Such assets carry a normal risk and are not NPA
in the real sense. So, no special provisions are required for Standard Assets.

Sub-Standard Assets : All those assets (loans and advances) which are considered as non-performing
for a period of 12 months are called as Sub-Standard assets.

Doubtful Assets : All those assets which are considered as non-performing for period of more than
12 months are called as Doubtful Assets.
Loss Assets : All those assets which cannot be recovered are called as Loss Assets.

These assets can be identified by the Central Bank or by the Auditors.

square Provision on types of assets

Provision is allocating money every year to meet possible future loss.

types of assets

square Causes of NPA

NPA arises due to a number of factors or causes like:-

Speculation : Investing in high risk assets to earn high income.

Default : Willful default by the borrowers.

Fraudulent practices : Fraudulent Practices like advancing loans to ineligible persons, advances
without security or references, etc.

Diversion of funds : Most of the funds are diverted for unnecessary expansion and diversion of
business.

Internal reasons : Many internal reasons like inefficient management, inappropriate technology,
labour problems, marketing failure, etc. resulting in poor performance of the companies.

External reasons : External reasons like a recession in the economy, infrastructural problems, price
rise, delay in release of sanctioned limits by banks, delays in settlements of payments by
government, natural calamities, etc.

Provisioning Coverage Ratio (PCR) refers to the funds to be set aside by the banks as fraction to the
loans. Assets are classified into four categories like standard, sub-standard, doubtful and loss. ...
Gross NPAs is just the total assets that you've lent out that you cannot recover.

Net NPA: Net NPA is simply the total bad assets (actual) minus the provision left aside. ... If an
individual bank has Net NPA in negative, then that is a good sign. In practise you would see the
Net NPA or Gross NPA as a percentage. Usually it iscalculated on the total lending done for that
year.

31. Loan Provisioning. Different types of it.

What is a 'Loan Loss Provision'

Loan loss provision is an expense set aside as an allowance for uncollected loans and loan payments.
This provision is used to cover a number of factors associated with potential loan losses including
bad loans, customer defaults and renegotiated terms of a loan that incur lower than previously
estimated payments. Loan loss provisions are an adjustment to loan loss reserves and can also be
known as valuation allowances.

The amounts recognized both at the time a loan is granted (generic provisions) and to cover the
loans classified as non-performing over a certain period of time are accounted for under
 the “Impairment losses on financial assets” and are stated on the P&L Account with a negative sign,
once the net operating income has been calculated. Provisions corresponding to future liabilities are
accounted immediately afterwards, also with a negative sign, under the “Provisioning
Expenses” heading. Therefore, both accounts can have a significant impact on the attributable result
of a financial institution.

32. Interest provisioning. Different types of it.

33. RBI Website regarding NPA
34. What is Amortisation.

Amortisation is a routine decrease in value of an intangible asset, or the process of paying off a debt
over time through regular payments.

Amortization is an accounting term that refers to the process of allocating the cost of an intangible
asset over a period of time. It also refers to the repayment of loan principal over time.

The key difference between amortization and depreciation is that amortizationcharges off the cost
of an intangible asset, while depreciation does so for a tangible asset.

Amortization and depreciation are non-cash expenses on a company's income

statement. Depreciation represents the cost of capital assets on the balance sheet being used over
time, and amortization is the similar cost of using intangible assets like goodwill over time.

35. What is Demonitisation.

36. Interest rate. Impact when you break FD/RD. Entries
37. Reserve ratios - SLR, CRR etc.

Cash Reserve Ratio (CRR): Each bank has to keep a certain percentage of its total
deposits with RBI as cash reserves. Statutory Liquidity Ratio (SLR): Amount of liquid
assets such as precious metals(Gold) or other approved securities, that a financial institution
must maintain as reserves other than the cash.
Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with the RBI.
If the central bank decides to increase the CRR, the available amount with the banks comes
down. The RBI uses the CRR to drain out excessive money from the system.
Statutory liquidity ratio (SLR) is the Indian government term for reserve requirement that
the commercial banks in India require to maintain in the form of gold, government approved
securities before providing credit to the customers.
CRR : 4%
SLR : 20.00%

RBI Reference Rate

INR / 1 USD : 63.9804
INR / 1 Euro : 76.1047

38. Payments system.

A payment system is any system used to settle financial transactions through the transfer of
monetary value, and includes the institutions, instruments, people, rules, procedures, standards,
and technologies that make such an exchange possible.

Payment system in Banking domain

A payment system is any system used to settle financial transactions through the transfer of
monetary value, and includes the institutions, instruments, people, rules, procedures, standards,
and technologies that make such an exchange possible.

The payment mechanism is the principal means for allocating risks and providing incentives in the
PPP contract. A useful way to approach the design of the payment mechanism is to start with a
basic/ideal structure for the Authority.

Real-time gross settlement. ... Real-time gross settlement are specialist funds
transfer systems where the transfer of money or securities takes place from one bank to another on
a "real time" and on a "gross" basis.

39. SEPA, Swift codes etc.

SEPA
The Single Euro Payments Area (SEPA) is a payment-integration initiative of the
European Union for simplification of bank transfers denominated in euro.
Swift code

A SWIFT code is an international bank code that identifies particular banks worldwide. It's
also known as a Bank Identifier Code (BIC). CommBank uses SWIFT codes to send money
to overseas banks. A SWIFT code consists of 8 or 11 characters. ... You'll need to give
this code to anyone sending money to you from overseas.
The SEPA Credit Transfer (SCT) is the Pan European Credit Transfer scheme that has
replaced domestic and cross border Euro Credit Transfers (CT) throughout theSEPA zone.
It provides a consistent approach for making payments across Europe and makes these as
easy to effect and receive as domestic ACH transactions.
A SEPA Direct Debit (SDD) is the standard across Europe for the collection of funds
between a debtor (payer) and the creditor (payee). The SEPA Direct Debit (SDD) scheme
is an interbank payment scheme defining a common set of rules and standard procedures
for direct debits in Euro.
debit transfer. A transfer of funds in which the payer issues a payment order to the payee,
the payee takes the order to the payee's bank and the order is passed back to the payer's
bank in exchange for the actual funds. Consumer payments by check are a type of debit
transfer. (See credit transfer.)
BBAN is short for Basic Bank Account Number. It represents a country-specific bank
account number. The BBAN is the last part of the IBAN when used for international funds
transfers. Every country has it's specific BBAN format and length depending on it's own
standards.