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Banking basic interview questions and answers - Page 1

1. What is banking ? Define it.

A bank is a firm which collects money from surplus sources and lends to those who need it.
Thus, a bank becomes an intermediate bridge between the borrower and the lender.
A bank safeguards money owned by individuals and entities also and lends to others to earn profit.

2. Soft Currency in Banking - Explain

Soft currency is also known as Weak currency.
A currency with a value that fluctuates as a result of the political or economic uncertainty.Soft currency can be in the form of paper, electronic or debt-based “IOUs” which have in the past been used in place of hard currency. This currency has limited convertibility into gold and other currencies.

3. Direct Tax - Explain?

A direct tax is that which is paid directly by someone to taxing authority. Income tax and property tax are examples of direct tax. They are not shifted to somebody else.

4. Indirect Tax - Explain?

This type of tax is not paid by someone directly to the authorities and it is actually passed on to the other in the form of increased cost. They are levied on goods and services produced or purchased. Excise tax, Sales tax, VAT are indirect taxes.

5. What is a Commercial bank?

A commercial bank is also known as business bank which accepts deposits, makes business loans, and offers related services. A commercial bank accepts deposits to personal and corporate accounts, and then uses the combined strength of the deposits to finance loans for individuals and businesses.

According to Crowther, “A bank is a firm which collects money from those who have it spare. It lends money to those who require it.”

According to Mr. Parking, “A bank is a firm that takes deposits from households and firms and makes loans to other households and firms.”