SBI PO Mains exam has over now. The Interview process for the same will commence shortly. Here we are providing some Questions, most likely to be asked in interview.
1. What are NPA (Non-Performing Assets)?
Answer: According to RBI, “An asset, including a leased asset, becomes non-performing when it failed to generate income for the bank. A ‘non-performing asset’ (NPA) was defined as a credit facility in respect of which the interest and/ or installment of principal has remained ‘past due’ for a specified period of time. The specified period was reduced in a phased manner and from the year 1995 onwards its 90 days.”
In other words , a loan or credit facility turns bad if the interest or installment remains unpaid even after the due date — and turns into a nonperforming asset, or NPA, if it remains unpaid for a period of more than 90 days.
In fact, if any amount to be received by the bank remained overdue for more than 90 days, it is classified as an NPA.
2. Mention some steps taken by RBI to tackle NPA.
Answer: RBI has taken some major steps to tackle NPA in recent past. Strategic Debt Restructuring (SDR), 5/25 restructuring, Joint Lenders’ Forum (JLF) and Prompt Corrective Action (PCA) are some of them.
3. What is difference between NEFT and RTGS?
Answer: It is system of Inter Bank Transfer. There are two systems of Inter Bank Transfer - RTGS and NEFT. Both these systems are maintained by Central Bank of India, RBI.
RTGS (Real Time Gross Settlement): This is a system where the processing of funds transfer instructions takes place at the time they are received (real time). Also the settlement of funds transfer instructions occurs individually on an instruction by instruction basis (gross settlement). RTGS is the fastest possible interbank money transfer facility available through secure banking channels in India.
National Electronic Funds Transfer (NEFT): It is a nation-wide payment system facilitating one-to-one funds transfer. Under this Scheme, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the Scheme.
Fund transfer transactions under this system are settled in batches as opposed to the continuous, individual settlement in RTGS.
4. What is disinvestment? What is the objective of it?
Answer: Disinvestment can be defined as the action of a government selling or liquidating an asset or subsidiary. Disinvestment is aimed at reducing the financial burden on the government due to incapable PSUs and to improve public finances.
It increases competition and market discipline and provides long-term growth for an organisation.
5. What is retail lending?
Answer: Retail banking can be broadly defined as lending to individuals. It covers a host of loans: those meant for investment in housing, those for purchases of consumer durables and automobiles and those for education or any unspecified purposes.
With an increase in the Non-performing Asset burdening the books of the Banks, commercial banks once again seem to be focusing on the retail lending business.
Retail Banking transited from being an unsafe and complex business to one considered easy to execute money-making and comparatively safe. In some instances, such as housing, the income earned (rent received) or expenditure saved (stoppage of rent payment) from the investment is seen as providing a part of the wherewithal needed to service the loan.
6. What is the punch line of SBI?