How to Ace Banking Interviews for CAs: A Guide for Students
Introduction
What does it take to stand out in an interview at Axis Bank? What do professionals at HDFC ask when recruiting freshers into the bank? CA Rajnish Roy, one of our esteemed mentors at CA Monk, answered these questions and provided more information about how to prepare for banking interviews for CAs. In this article, we have all the tips and tricks you need to ace your interviews at the top banks in the country.
Understanding the Banking Industry
The banking sector plays a pivotal role in the country’s economy, acting as the backbone of financial stability. Banks serve as middlemen that facilitate the flow of funds, enabling businesses and individuals to save, borrow and invest.
For Chartered Accountants, this industry presents a landscape with multiple career opportunities. CAs can find roles in auditing, risk management, financial analysis and advisory services within banks. Roles like Credit Manager, Relationship Manager, and Internal Auditor are tailored for CAs, offering immense growth potential.
Moreover, banks are actively looking for candidates who can contribute to risk management, compliance with Reserve Bank of India (RBI) guidelines, and facilitate strategic financial planning. Their expertise in financial reporting, compliance and decision-making positions them as valuable assets in the growth of financial institutions.
Assets vs Liabilities in a Bank
Assets and Liabilities for banks are a bit different than for typical manufacturing companies. Since banks are in the money-lending business, the loans given to customers are compiled in the asset books. The Time and Demand Deposits accepted from the customer into the bank are classified as liabilities.
The roles on the asset side deal with credit appraisals, credit management, relationship management with customers, customer acquisition and disbursement. The roles on the liabilities side are usually branch managerial roles. These roles based on experience can help the candidate move from a branch manager to a zonal manager or can be appointed to a compliance role.
The transactions in a bank are broadly classified into “retail” and “wholesale”. The retail side of transactions deals with home loans, personal loans, and credit cards which individual customers apply for. The wholesale side or the corporate side deals with companies based on the revenue of the company. Companies are classified based on their balance sheet size into MSMEs, large corporations, MNCs and more.
When big companies require funds in the form of term loans or working capital, they approach the bank for assistance. Here, credit managers are the second line of defence who have to analyse and assess the risks of funding the company.
Roles offered in Banking for CA Freshers
The banking industry offers various roles suited for CAs, each with unique responsibilities and growth trajectories. Listed here are a few roles which may be offered to CA freshers:
- Credit Manager: Credit Managers assess and analyse the creditworthiness of individuals or businesses applying for loans or credit facilities. Some of the responsibilities of a credit manager include evaluating financial statements and credit reports to determine risk, calculating credit scores and ratings for applicants and monitoring existing loans. Usually, the proposals for loans or working capital are handled by credit managers.
- Relationship Manager: Relationship managers are the face of the bank. These roles include building and maintaining client relationships, offering financial advice and solutions and ensuring compliance with banking regulations. These roles are on the sales side and are in charge of bringing in customers.
What do Interviewers look for in CA Freshers?
The biggest question for freshers is how do we prepare for interviews? The first impression is the last impression, so here are a few tips from CA Rajnish on what you should prepare for:
- Communication Skills and Appearance: Effective communication is paramount in the banking sector. Demonstrate your capacity to convey financial information clearly and concisely. This confidence paired with a well-groomed and sharp appearance makes a good impression on banking professionals, as they expect candidates to be well-dressed and be good communicators.
- Technical Skills: Banking roles often require financial understanding and familiarity with banking products and services. Showcase your proficiency in financial analysis and be hands-on with banking terminology. Your confidence in explaining technical terms and familiarity with the bank will help you stand out in a crowd.
How to Find Valuable Information?
There are multiple sources of information available to research and prepare for your interviews. Here we have listed the best resources that are sure to help you ace your preparation:
- About the Bank: Check the bank’s About Us pages to know the bank’s history, mission, and values. For example, HDFC bank’s About Us page has sections that provide an overview of the company, investor and stakeholder details, latest news and current vacancies. Make sure to study the bank’s website and gather information on what products the bank offers, and what the financials are like. This information can help you align your answers with the bank’s culture. Familiarize yourself with the range of services the bank offers and check for recent press releases to learn about the bank’s latest developments and strategic initiatives.
- Wikipedia: Wikipedia pages about the bank and banking industry terminology will help communicate your opinions.
- Financial Statements: Financial statements of the banks are available for viewing on the official websites and these statements help you get an understanding of the financial standing of the bank in that year.
- Press releases: Pay attention to recent press releases regarding the bank’s market expansion, new product launches, technology investments, and regulatory compliance achievements.
- Google: Search for recent news articles and blogs related to the bank you’re interviewing with and read up on industry trends, regulatory changes, and emerging technologies in the banking sector. This also includes being updated on conversion rates like dollar rate, crude oil prices, and Repurchasing Option (REPO) rate.
- RBI Website: Study RBI’s Master Circulars to understand the central bank’s guidelines. Familiarize yourself with the RBI’s initiatives to promote financial inclusion, as these are relevant to banking operations.
- Financial News Websites: Stay updated on financial news websites like Bloomberg or CNBC to understand global economic trends and their impact on the banking sector.
How are Banking Interviews for CAs conducted?
In banking interviews for CAs, the interviewer starts with basic icebreaker questions like “Take me through your resume” or “Tell us something about yourself.” These are generally conversation starters and are asked in all interviews. The interviewers also ask why you are inclined to join the bank. Here, your knowledge about the bank comes into play. The interviewer may ask about financial analysis parameters for specific job role-related questions.
Technical Terms asked During Interviews
The candidate must familiarise themselves with technical terms like:
- Ratio analysis: Ratio analysis refers to the analysis of various pieces of financial information in the financial statements of a business. They are mainly used by external analysts to determine various aspects of a business, such as its profitability, liquidity, and solvency.
- Quick Ratio: The Quick Ratio or Liquidity ratio measures the ability of a business to pay its short-term liabilities by having assets that are readily convertible into cash.
- Current Ratio: The current ratio is a liquidity ratio that measures a company’s ability to pay short-term obligations or those due within one year. It tells investors and analysts how a company can maximize the current assets on its balance sheet to satisfy its current debt and other payables.
- Gross margin: Gross margin is the percentage of a company’s revenue that’s retained after direct expenses such as labour and materials have been subtracted.
- Net Interest Margin: Net margin is one indicator of a bank’s profitability and growth. It reveals how much the bank is earning in interest on its loans compared to how much it is paying out in interest on deposits.
- Leverage: Leverage is using debt or borrowed capital to undertake an investment or project. It is commonly used to boost an entity’s equity base.
- Debt Equity Ratio: is it good or bad?
- How do you read financial statements?
These questions are quite common for credit manager roles as the job responsibilities cover these aspects. The interviewer may also present a few balance sheets and ask the candidate to explain their opinion. Being comfortable with the financial analysis parameters will help you answer confidently.
Essential Terms in Banking Interviews for CAs
Understanding key terms related to banking is crucial to gaining the upper hand in the technical questions. Here are some important terms mentioned by CA Rajnish that you should be aware of before your interview:
- Time Deposit
- Demand Deposit
- Cash Reserve Ratio (CRR)
- Statutory Liquidity Ratio (SLR)
- Advances
- Working Capital Demand Loan
- Term Loan
- Letter of Credit
- Bank Guarantees
Relationship Management roles may have questions on:
- Know your Customer (KYC)
- Which banking product will you sell to your customer based on their requirement?
As freshers, the questions may not be highly technical but there may be situation-based questions to gauge your opinion. For example, if a company applies for a loan but is incurring heavy losses, would you support the company financially? As a potential answer to this, you should go through the financial projections of the company and study the assumptions to understand how reliable they are. You may be asked to analyse the year-wise projections made by the company to understand the creditworthiness.
Conclusion
As you prepare for your banking interview, remember that confidence and curiosity are your strongest assets. The ability to connect your qualifications to the bank’s objectives, coupled with an eagerness to learn, will set you apart. Understanding the banking industry, researching the bank you’re interviewing with, and practising interview questions are essential steps to success.
We at CA Monk, have a Banking Mastery Masterclass with experienced mentors to help you become well-equipped and excel in your interview. Join us and get ready to take the first step towards your dream career in banking!
Got more questions? Reach out for Banking Interview prep with CA MONK.
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