Banking Operations
Banking operations tests how money moves and how the bank records it. Expect questions on account opening, clearing, transfers, loan disbursement, reconciliation and the difference between front-office and back-office work.
Core processes
- Account opening requires KYC, photograph, nomination and risk categorisation.
- Cash deposits increase the customer's balance; the bank records cash as an asset and the deposit as a liability.
- Cheque clearing in India uses CTS, the Cheque Truncation System, where an electronic image replaces the physical cheque.
- NEFT settles in batches, RTGS is for high-value real-time payments with a ₹2 lakh minimum, and IMPS is immediate retail transfer.
- Standing instructions, liens, stop-payment and dormant-account controls are routine operations.
- Back office reconciles entries, monitors suspense accounts and reports suspicious transactions.
Worked example
A customer deposits a ₹50,000 cheque drawn on another bank. The bank credits the account provisionally and sends the image through CTS. If the paying bank returns it for insufficient funds, the entry is reversed and charges may apply. In the bank's books, the initial credit creates a deposit liability; when the cheque is collected, cash or balances with RBI increase. The reasoning is that the customer balance is a liability, not bank-owned money.
Traps that cost marks
Reversing debit and credit in the bank's own books; assuming a provisional credit is final; ignoring clearing holds; confusing RTGS with NEFT; and treating a lien as a permanent debit. Also remember that a loan is an asset for the bank, while a deposit is a liability.