Compound Interest

IBPS PO Interview FAQ#1
Mostly questions are asked like that
1. In which bank you are having your account?
2. What kind of account it is?
3. What is the interest rate you are getting ?
4. Why did you choose this bank to open your account?
rd
Answers of first two questions are simple. How to answer 3 question?
Generally we are not aware of it. So I’ll suggest you all to visit your bank and confirm the interest
rates of every type of account. But as you don’t remember now then I want to tell you that minimum
interest rate given by banks on saving account is 4% and maximum is 7% (Yes Bank).
Now answer of question no. 4 – it is very simple to answer this question
● This bank is nearest bank to my home.
● Staff of this bank is very cooperative.
● Services of this bank is very fast compare to others
You can give any example of any incident to support your above said points.
Questions are asked like that

1. Why do you want to join banking industry?
2. Why banking after B.tech?
The answer of these two questions is same
● No. Of opportunities in banking sector is more.
● Banking sector job is a respectable job.
● Frequent growth (promotions).
Always elaborate your point.
Don’t say ever that
● no. Of holidays are more in banks.
● This is my childhood dream.
● My father wants me to become a banker.
● It is a good job that’s why I want to join it.
● I didn’t get placement after B.tech that’s why i turned towards banking.
These answers will put negative image of your in front of interviewers.
3. How did you come to know about banking industry or how did you get interest in banking
sector jobs?
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The answer of this question should be practical and satisfactory.
● In my neighbourhood I saw my uncle’s growth who is bank employee. Now his status,
living standard and respect in society is impressive. He got promotion within 3 years of
his job. These are the reason of my interest in banking jobs.
● I have learnt lots of software and gained computer knowledge in my b.tech. As we know
today banking industry is fully based on computer application
Questions which are frequently asked are‐
1. Why should I choose you?
This is the question for which you should know yourself better. You must aware of your
strength, your strong points, speciality of yourself. Explain yourself in a simple way.
If I have to answer this question I will say “sir as you can see my academic scores are good
which shows that I am a hardworking and self disciplined person. As I have worked in an
industry I can handle manpower very well. I can interact with industrial representative
effectively bcoz i have done this in my last job too. My certificates show that I am a good
leader. Thus I think you should choose me.”
So the answer should contain your strength as well as your educational speciality. If your
academic scores are not good you can tell your software knowledge as your positive points.
2. What is the role of PO? Or tell me about the role of PO?
These are the things you must know about PO and answer accordingly
●Good communication skill and ability to resolve conflicts calmly
●A bank PO can be asked to do anything related to banking till the completion of its
probation period. During training they are trained for accounting, marketing, finance,
investment as well as billing.
● After the probation period the bank PO becomes assistant bank manager. Then his
work is to handle daily customer transaction like passing a cheque, cash management,
draft issuance etc.

3. Where do you see yourself after 5 or 10 year?
This is a question to know your future goals or ambitions. Don’t answer like I want to see
myself as a branch manager or an IAS officer or anything else. Answer diplomatically
“I see myself to grow with the growth of organisation. I want to take a position of
responsibility in the field of banking and prove myself year after year”.
today i am sharing some basic questions that you must know
1. What is NOSTRO and VOSTRO account?


NOSTRO Account : A NOSTRO account is maintained by an Indian bank in the foreign
countries. (NOSTRO means OURS)
VOSTRO Account : A VOSTRO account is maintained by a foreign bank in India with
their corresponding bank.(VOSTRO means YOURS).
2. What is SWIFT?
SWIFT : Society for Worldwide Interbank Financial Telecommunication.
India was 74th Nation to join SWIFT Network. SWIFT Code is a
standard format of bank Identifier code. This code is used particularly in International
transfer of money between banks. A majority of FOREX related message are sent to
correspondent banks abroad through SWIFT. SWIFT Code consist 8 or 11 character
when code is 8 digit, It is referred to primary office
4 – bank code
2 – country code
2 – location code
3 – branch code (optional).
3.What is BSBDA?
Under the guidelines issued on August 10, 2012 by RBI: Any
individual, including poor or those from weaker section of the society, can open zero
balance account in any bank. BSBDA guidelines are applicable to "all scheduled
commercial banks in India, including foreign banks having branches in India". All the
accounts opened earlier as 'nofrills' account should be renamed as BSBDA. Banks are
required to convert the existing 'nofrills' accounts’ into 'Basic Savings Bank Deposit
Accounts'. The 'Basic Savings Bank Deposit Account' should be considered as a normal
banking service available to all customers, through branches .The aim of introducing
'Basic Savings Bank Deposit Account' is very much part of the efforts of RBI for
furthering Financial Inclusion objectives.
4. What is BPS (Basis Points)?
BPS (Basis point) : BPS is an acronym for basic points is
used to indicate changes in rate of interest and other financial instrument.
1 BASIS POINT = 0.01%
So when we say that repo rate has been increased by 25 bps,
it means that the rate has been increased by 0.25%

These are some points which can be asked at the time of interview.
Saving Account
● Transaction limit ‐ maximum 50 transaction in 6 months (But generally bank does not
take any charge if it exceeds)
● Interest rate
Upto 1 lakh – 4% (fixed by RBI)
Above 1 lakh – individual bank decide but it must be above 4%
at present YES Bank has maximum interest rate that is 7%

On demand deposit simple interest is given half yearly. And the calculation of interest is
done by calculating minimum daily balance (MDB)
Current Account
● No interest rate
● Folio charges(40 entries => 1 folio)
● No. Of free cheque books more compare to saving bank account.
Fixed Deposit
● For 7 days to 10 year.
● Compound interest calculated quarterly.
● The highest interest rate is offered by the Ratnakar Bank at 9.0% for 24 to 36 months FD.
● Banks offer loan/overdraft against the amount available in FD. The interest is generally
0.5% to 1% more than that offered to FD.
Recurring Deposit
● Money deposit from 6 months to 10 year
● Money deposit in multiple of 3 months.
● Rate of interest same as FD.
what is Tax Deducted at Source(TDS)?
TDS as name tells tax is deducted at source. Suppose you are doing government job and your
monthly salary comes in your account then the salary providing dept. calculate your annual salary
and according to your income deduct the income tax. This is called Tax Deducted at Source. Now you
need not to pay any income tax.
Income_______Tax rate
0‐2.5 lakh_____no tax
2.5‐5lakh______10%
5‐10 lakh______ 20%
above 10 lakh___30%
These are some questions which are asked in recent IBPS RRB interview. Although I have compiled
them in simple language but if you wanna ask anything then you can.
1. What is TREASURY BILLS (TB)?
Treasury bills (T‐Bills) are the short term liabilities of the central government . Theoretically
government of India issued three types of T‐bills through auctions, namely 91 days, 182days,and 364
days. There are no treasury bills issued by state government. Minimum amount of T –Bills is Rs. 2500
and in multiple of RS. 2500. T‐bills are issued at a discount and are redeemed at par. From 1st April
1997 treasury bills have been replaced by WAYS AND MEANS ADVANCES.

2. What is COMMERCIAL PAPER (CP)?
Commercial paper was introduced by RBI in 1991. It is a short term money market instrument issued
in the form of promissory note .Corporate; primary dealers and the all India financial institution are
eligible to issue CP. The maturity period of each commercial paper is 7days to 1year from the date of
issue .CP can be issued denominations of Rs. 5lakh or multiples thereof. Only a schedule bank can
act as an issuing and paying agent (IPA) for issuance of CP.
3. What is SENSEX and NIFTY?
SENSEX is the short term for the words "Sensitive Index" and is associated with the Bombay
(Mumbai) Stock Exchange (BSE). The SENSEX was first formed on 1‐1‐1986 and used the market
capitalization of the 30 most traded stocks of BSE.
Whereas NSE(National Stock Exchange) has 50 most traded stocks of NSE.SENSEX IS THE INDEX OF
BSE. AND NIFTY IS THE INDEX OF NSE.BOTH WILL SHOW DAILY TRADING MARKS. Sensex and Nifty
both are an "index”. An index is basically an indicator it indicates whether most of the stocks have
gone up or most of the stocks have gone down.
4. What is foreign exchange reservers?
Foreign exchange reserves (also called Forex reserves) in a strict sense are only the foreign currency
deposits and bonds held by central banks and monetary authorities.However, the term in popular
usage commonly includes foreign exchange and gold,SDRs and IMF reserve positions.

Guys it happens at the time of interview we know the answer but unable to speak bcoz we have not
practiced it before. It happened to me at the time of my first mock interview. So better to learn
them before in short and sweet manner.

1.What is GDP?
The Gross Domestic Product or GDP is a measure of all of the services and goods produced in a
country over a specific period; classically a year.

2.What is GNP?
Gross National Product is measured as GDP plus income of residents from investments made abroad
minus income earned by foreigners in domestic market.

3.What is IPO?
IPO is Initial Public Offering. This is the first offering of shares to the general public from a company
wishes to list on the stock exchanges
4.What is FDI?
FDI (Foreign Direct Investment) occurs with the purchase of the “physical assets or a significant
amount of ownership (stock) of a company in another country in order to gain a measure of
management control” (Or) A foreign company having a stake in a Indian Company.

5.What is FII?
FII (Foreign Institutional Investor) used to denote an investor, mostly in the form of an institution. An

institution established outside India, which proposes to invest in Indian market, in other words
buying Indian stocks. FII's generally buy in large volumes which has an impact on the stock markets.
Institutional Investors includes pension funds, mutual funds, Insurance Companies, Banks, etc.

Guys these 5 things are the ingredients of any interview
1. What and who are you? What is your qualification for the post?
You should prepare your introduction in a systematic manner. Answers related to
hobbies, strength, weakness should be prepared in a positive manner. Whatever you
speak that must be narrated very well and practise cross questions on them at home
which can be asked at the time of interview.
(For banking as you know graduation is minimum eligibility criteria so the thing is
what have you done in your graduation...Are you an Arts graduate? or a Commerce
graduate? or a B.Tech?). You should have complete knowledge of your subjects you
have studied in your graduation. I know it is quite tough but basics should be clear.

2. What is your family background? What your parents do?
Generally in interviews questions are asked related to family member’s occupation.
Recently in many interview experience posts of IBPS RRB we have seen this. For
example if a person’s father is a farmer then he was asked about the different seasonal
crops. So one should be ready for that. He should know as much as he can about the
occupation of his/her family member like the government schemes related to
agriculture, different type of crops.

3. What is your past work experience? How’s that? How’s your boss? What was/is your
work profile?
You should ready for this type of questions and practice them at home. Always
answer in such a manner that your views reflect your positive side of personality. You
should have complete knowledge related to your work. They can ask anything from
the origin of the company to present market value of the products your company
make.

4. Now this is the most important thing. You should prepare for the questions related to
current affairs, banking awareness and computer skills. Generally they ask 3 or 5
news of the day of interview. So you should read newspaper before facing the
interview panel.

5. These are the questions related to the places related to you. Suppose you live in Jaipur
and completed graduation from Ajmer and your interview is in Udaipur. So you must
have thorough knowledge of these all 3 places like history, famous places etc. You
must have the good knowledge of your district and state like famous personalities,
MLAs and MPs of your district, historical places(who made them and why) etc.

This is all you have to prepare for your interview. Make your answers and practice
them. No question will be asked out of these 5 things.
☺
All the best guys



I am studying interview experiences now days. In many of them questions related to cheque is asked
generally. Now I am posting the important things related to cheque that you must know.

Q.1 What is a cheque?
Ans. Cheque is a bill of exchange in which a person X orders bank Y to issue money to himself or to
another person Z. Cheque is a negotiable instrument. So here
● X is Drawer(who write the cheque)
● Y is Drawee(The bank)
● Z is Payee(who receives money)

Q.2 In which type of cheque drawer and payee are same?
Ans. In self cheque drawer and payee are same

Q.3 What are the things which are mentioned on cheque?
● Name and branch of bank
● Payee name (and account number)
● Amount in words and in numbers
● IFSC code
● Drawer’s signature
And at the bottom of cheque
● Cheque no.(6 digit)
● MICR no.(9 digit)
● 2 digit no. Which shows type of account (like for saving =31 and for current=29 )

Q.4 What does MICR denote?
Ans. MICR stands for Magnetic Ink Corrector Recognition. It is a 9 digits code.
Initial 3 digits denote city pin code.
Middle 3 digits denote Bank code (like for SBI it is 002, for Indian bank 019).
Last 3 digits denote Branch Code.

Q.5 In which cases banks can deny to pay cheque amount?
● Less amount in account
● Stale cheque
● Post dated cheque
● Mutilated cheque
● Signature of drawer not matched
● Drawer is mentally disabled.
● Drawer is dead.
● Drawer is bankrupt(like SAHARA and VIJAY MALYA)
● Court order

I think you all know the types of cheque. So I am not posting them here. I wish it will help you.

today i am again providing some basic definitions which you must know
1.What is a Repo Rate?

Repo rate (6.75% at present) is the rate at which our banks borrow rupees from RBI. Whenever the
banks have any shortage of funds they can borrow it from RBI. This is a short term loan provided for
upto 90 days by selling securities to RBI and receiving money in lieu of it.
A reduction in the repo rate will help banks to get money at a cheaper rate. So bank lend this money
to customers and inflation takes place.
When the repo rate increases, borrowing from RBI becomes more expensive. And Inflation
decreases.
2.What is Reverse Repo Rate?
This is exact opposite of Repo rate. Reverse Repo rate (5.75% at present) is the rate at which Reserve
Bank of India (RBI) borrows money from banks. RBI uses this tool when it feels there is too much
money floating in the banking system. Banks are always happy to lend money to RBI since their
money is in safe hands with a good interest. An increase in Reverse repo rate can cause the banks to
transfer more funds to RBI due to these attractive interest rates.
Liquidity Adjustment Facility (LAF) introduced in 2000 has a provision that reverse repo rate will be
1% less than the repo rate.

3.What is CRR Rate?
Cash reserve Ratio (CRR) is the part of Net Demand and Term Liability(NDTL) or cash of the bank
deposited with RBI. At present CRR is 4% means a bank should deposit 4% of NDTL of that bank to
RBI. If RBI decides to increase the percent of this, the available amount with the banks comes down.
RBI is using this method (increase of CRR rate), to drain out the excessive money from the banks.
4.What is Bank Rate?
Bank rate(at present 7.75%) is same as the repo rate but here the time period is for more than 90
days. Bank Rate, also referred to as the discount rate, is the rate of interest which a central bank
charges on the loans and advances that it extends to commercial banks and other financial
intermediaries. Changes in the bank rate are often used by central banks to control the money
supply.
5.What is SLR Rate?
SLR (Statutory Liquidity Ratio 21.5% at present) is the amount of NDTL a commercial bank needs to
maintain in the form of cash, or gold or govt. approved securities (Bonds) before providing credit to
its customers
Q. What is NDTL?
NDTL stands for Net Demand and Time Liabilities (you can use here "Term" in place of "time" too).
NDTL contains the demand liabilities and term liabilities of bank.Demand liabilities are those
deposits which bank have to pay on customers' demand. Example of demand deposit or liability are
saving bank account, current bank accounts, matured fixed deposits.Term liabilities are those
deposits which bank will pay after a particular time span or after maturity. Like immatured fixed
deposits, recurring deposits.so the money come from these two deposits is combinedly called NDTL.
Q. what is MSF?
MSF stands for Marginal Standing Facility. In MSF, banks borrow money from RBI for overnight or for
upto 24 hours. MSF is always 1% more than repo rate. At present MSF is 7.75%. And on MSF banks
can borrow only upto 25% of their NDTL from RBI.
Guys today I am again explaining some basic banking terminologies which are very important and
you must know how to answer those questions.

1. What is Liquidity Adjustment Facility (LAF)?
As the name tells it is used to adjust the money supply in the market. This is used by
government to assure basic stability in the financial markets. It allows banks to borrow
money through repurchase agreements. In simple words policy rates (like repo rate, reverse
repo rate) and ratio rates (like CRR and SLR) are tools to adjust financial stability in market
and combinedly called LAF.
2. What is IFSC?
● IFSC stands for Indian Financial System Code.
● It is an eleven digit alpha numeric code in which first 4 alphabetical digits represent
th
the bank, the 5 digit is 0 always and last 6 digits represent the bank branch. For
example‐ SBIN0005298
● It helps in NEFT.
3. What is CBS?
CBS stands for CORE Banking Solution. Here CORE stands for Centralized Online Realtime
Exchange. In CBS the branches of the banks are interconnected with each other through
intra net with a central database server.
4. What is NEFT and RTGS?
NEFT‐
● NEFT stands for National Electronic Fund Transfer.
● In this any person, firm and corporate can electronically transfer funds from any
bank branch to any person, firm and corporate having an account with any other
bank branch in the country.
● There is no maximum and minimum limit on the amount of funds transfer however
maximum amount per transaction is limited to Rs. 50000/‐ for cash based
remittances and remittances of Nepal.
RTGS‐
● RTGS stands for Real Time Gross Settlement.
● “Real Time” means the processing is done at the same time without any delay.
● “Gross Settlement” means the settlement of fund transfer occurs on an
instruction by instruction basis.
● RTGS system is for large value of transactions.
● The minimum amount to be remitted through RTGS is Rs. 2 lakh and there is no
maximum limit.
NEFT operates on Deferred Net Settlement (DNS) basis which settles transaction in batches whereas
RTGS transactions are processed continuously throughout the RTGS business hours.

Today I am going to explain those topics which we know very well but at the time of interview,
interviewer can play with our concepts. So to bat very well I am explaining all aspects of those
questions.

1. What is NBFC?
● A Non Banking Financial Company (NBFC) is a company registered under the
Companies Act, 1956.

● These companies are involved in business of loans and advances, acquisition of
shares/stocks/debentures/bonds/securities issued by government or local authority
● The companies involve in leasing, hire‐purchase, insurance business, chit fund
business are also called NBFCs

The asset income approach gives us a good definition for NBFC and I believe you should
speak this at the time of interview first. According to that an NBFC is a company whose
I. Financial assets are more than 50% of its total assets and
II. Income from financial assets should be more than 50% of the gross income.
Remember an NBFC must follow the both conditions not a single one. If it does so then only it is
called an NBFC.

2. What are the differences between NBFC and banks?
● NBFC cannot accept demand deposits (means they can accept term deposits)
● Banks are incorporated under Banking Regulation Act, 1949 whereas NBFC is
incorporated under Companies Act, 1956
● NBFC do not form part of the payment and settlement system and cannot issue
cheque drawn to itself
● Deposit insurance facility of DICGC is not available to depositors in case of NBFC
Other important points
● NBFCs have a minimum bet owned fund of Rs. 200 lakh.
● At present the maximum interest rate offered by an NBFC is 12.5%
● The NBFCs are allowed to accept/renew public deposits for a minimum period of 12 months
and maximum period of 60 months. They do not accept deposits repayable on demand.
3. What is DICGC?
● DICGC stands for Deposit Insurance And Credit Guarantee Corporation.
● DICGC insures the deposit of all commercial banks including branches of foreign
banks functioning in India, local area banks and regional rural banks.
● DICGC insures both principle and interest up to a maximum amount of Rs. 1 lakh.
In case of a bank failure, DICGC protects bank deposits that are payable in India. The DICGC insures
all deposits like savings,fixed,current,recurring etc. Except the following deposits

● Deposits of foreign governments
● Deposits of central/state governments
● Interbank deposits
● Deposits of the State Land Development Banks with the state co‐operative bank
● Any amount due on account of any deposit received outside India
● Any amount, which has been specifically exempted by the corporation with the previous
approval of RBI.

Guys today I am explaining a topic which is important and can be asked in an interview.

Sovereign Gold Bond Scheme‐

1. What is the need for a sovereign gold bond?
● The main idea is to reduce the demand for physical gold.
● Shift part of the estimated 300 tons of physical bars and coins purchased every year
for investment to gold bonds.

2. What is Sovereign Gold Bond Scheme?
● Sovereign gold bonds will be issued on payment of money and would be linked to
the price of gold.
● Bonds will be issued on behalf of the Govt. Of India by RBI.
● The maximum limit of purchase is 500grams per person per year.
● The Govt. will issue bonds with a nominal rate of interest (which will be linked to the
international rate for gold borrowings). An indicative lower limit of 2% may be given
but the actual rate will have to be market determined (At present rate of interest is
2.75%).
● The rate of interest on the bonds will be payable in terms of grams of gold. For ex.
The rate of interest is 2% and you have 100 grams gold bond then at the time of
maturity you will get the money equivalent to 102 grams.
● On maturity, the investor receives the equivalent of the face value of gold in rupee
terms.
● The bond denominations are of 2, 5 and 10 grams of gold.
● Banks/NBFCs/post offices may collect money/redeem bonds on behalf of Govt.
● The tenor of the bond could be for a minimum of 5 to 7 years so that it would
protect investors from medium term volatility in the gold prices.
● Bonds can be used as collateral for loans.
● Bonds can be sold and traded on commodity exchange.
● Capital gains tax treatment will be the same as for physical gold (means this scheme
is taxable).

● Upside gains and downside risks will be with the investor and the investor will need
to be aware of the volatility in gold prices.

This is all about sovereign gold bond scheme. My next post will explain Gold monetization scheme.

For the IBPS point of view Basel Accord has many important questions. Today I am providing these
notes to you which are in simple language so that you can understand it very well.
1. What is Basel?
Basel is a city in Switzerland which is also the headquarters of Bureau of International
Settlement (BIS). BIS fosters co‐operation among central banks with a common goal of
financial stability and common standards of banking regulations. The Bank for International
Settlements (BIS) established on 17 May 1930, is the world's oldest international financial
organization. There are two representative offices in the Hong Kong and in Mexico City. In
total BIS has 60 member countries from all over the world and covers approx 95% of the
world GDP.

2. What is Basel Accord?
The set of agreement by the BCBS (BASEL COMMITTEE ON BANKING SUPERVISION), which
mainly focuses on risks to banks and the financial system are called Basel accord. The
purpose of the accord is to ensure that financial institutions have enough capital on account
to meet obligations and absorb unexpected losses. India has accepted Basel accords for the
banking system. Up till now BASEL ACCORD has given us three BASEL NORMS which are
BASEL 1, 2 and 3.

3. What is Basel‐1?
● In 1988, The Basel Committee on Banking Supervision (BCBS) introduced capital
measurement system called Basel capital accord, also called as Basel 1.
● It focused almost entirely on credit risk; it defined capital and structure of risk
weights for banks.
● The minimum capital requirement was fixed at 8% of risk weighted assets (RWA).
● India adopted Basel 1 guidelines in 1999.

● In 2004, Basel II guidelines were published by BCBS, which were considered to be the
refined and reformed versions of Basel‐1 accord.
The guidelines were based on three parameters which are as follows‐
● Banks should maintain a minimum capital adequacy requirement of 8% of risk assets.
● Banks were needed to develop and use better risk management techniques in
monitoring and managing all the three types of risks that is credit and increased
disclosure requirements.
● The three types of risk are‐ operational risk, market risk, capital risk.

● Banks need to mandatory disclose their risk exposure, etc to the central bank.
● Basel II norms in India and overseas are yet to be fully implemented.

● In 2010, Basel‐3
guidelines were released. These guidelines were introduced in
response to the financial crisis of 2008.
● In 2008, Lehman Brothers collapsed in September 2008, the need for
a fundamental strengthening of the Basel‐2 framework had become apparent.
● The guidelines aim to promote a more resilient banking system by focusing on
four vital banking parameters viz. capital, leverage, funding and liquidity.
● Basel‐3 norms aim at making most banking activities such as their trading book
activities more capital‐intensive.
● Presently Indian banking system follows Basel‐2 norms.
● The Reserve Bank of India has extended the timeline for full implementation of
the Basel III capital regulations by a year to March 31, 2019.

Important points regarding to the implementation of Basel‐3

● Government of India is scaling disinvesting their holdings in PSBs to 52 per cent.
● Government will soon infuse Rs 6,990 crore in nine public sector banks including SBI,
Bank of Baroda (BoB), Punjab National Bank (PNB) for enhancing their capital and
meeting global risk norms.
● This is the first tranche of capital infusion for which the government had allocated Rs
11,200 crore in the Budget for 2014‐15.
● The government has infused Rs 58,600 crore between 2011 to 2014 in the
state‐owned banks.
● Finance Minister Arun Jaitley in the Budget speech had said that "to be in line with
Basel‐III norms there is a requirement to infuse Rs 2,40,000 crore as equity by 2018
in our banks. To meet this huge capital requirement we need to raise additional
resources to fulfill this obligation.


Today I am providing you notes related to loans. These questions are basic and asked
frequently.

Basically there are 4 types of loan securities accepted by bank.
1. Lien
● Lien is taken against the fixed deposits.
● Papers of FD are held with bank, so we can say owner is bank.
● Our Fixed Deposits are submitted to bank, so possession is with bank only
● Original documents are also held with the bank.

2. Pledge
● Pledge is taken against the goods.

● Now we know goods are kept in warehouses. Bank takes the keys of
warehouse. So owner is bank.
● Possession of goods is also with the bank.
● But the original documents related to goods are held with customer.

3. Hypothecation
● Hypothecation is taken against the movable property like vehicles.
● Suppose you took loan for car. Now as you have taken the loan from bank so
here also owner is bank.
● Now customer uses the car so possession is with customer.
● Original documents like papers of car are held by customer.

4. Mortgage
● Mortgage is taken against the immovable property like land, flat etc.
● Again as you have taken loan from the bank, the owner is bank.
● The customer can use the land so the possession is with customer.
● But the original documents are submitted to bank.

# Assignment is a type of loan security which is taken against future income.
# Gold comes in the category of pledge.
# In all types of loan, owner is always the bank from which you have taken loan.


Today I am posting some questions which I was asked by my friends. No doubt these are
also important.

1. What is Certificate of Deposit (CD)?

● Certificate of Deposit (CD) is a negotiable money market instrument and
issued in dematerialised form or as a Usance Promissory Note against funds
deposited at a bank or other eligible financial institution for a specified time
period. Guidelines for issue of CDs are presently governed by various
directives issued by the Reserve Bank of India (RBI).
● CDs can be issued by
(i) Scheduled commercial banks {excluding Regional Rural Banks and
Local Area Banks} and
(ii) Selected All‐India Financial Institutions (FIs) that have been permitted
by RBI.
● Certificate of Deposit can be issued to individuals, corporations, companies,
trusts, funds, associations etc. The Non resident Indians are also eligible for
CDs.
● CDs in physical form are freely transferable by endorsement.
● Minimum amount for Certificate of Deposit has been fixed at Rs. 1 Lakh, to be
accepted from a single subscriber.
● Larger amounts have to be in the multiples of Rs. 1 Lakh.
● Certificates of Deposit are money market instruments and their maturity
period is between seven days to one year for commercial banks.

● The FIs can issue CDs for a period not less than 1 year and not exceeding 3
years from the date of issue.
● The CDs are issued at a discount on face value. Return on them is difference
between the issue value and face value.
● There is no lock‐in period for certificates of deposit
● Banks/FIs cannot grant loans against CDs.

2. What is difference between Commercial Paper and Certificates of Deposits?
● CD is issued by the Commercial banks and Finance Institutions, while
commercial papers are issued by corporate, primary dealers (PDs) and the
All‐India Financial Institutions (FIs).

● CD is issued for Rs. 1 Lakh or its multiples while CP is issued in denominations
of Rs.5 lakh or multiples thereof.

3. What is a promissory note?
Promissory note is an instrument in writing in which maker sign an unconditional
undertaking to pay a certain sum of money to the order or the bearer of instrument.
There are two parties in a promissory note
● Maker (who promises to pay)
● Payee (to whom it is payable)



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