My RBI Grade B Interview

 Interview Experience – RBI Grade B 2018

PLACE AND DATE: 20.12.2018, CHENNAI

GRADUATION: B. TECH [IT]

WORK EXPERIENCE: 2 YEARS IN SOFTWARE COMPANY AND AT PRESENT WORKING AS ASSISTANT MANAGER [DIRECT CREDIT OPERATIONS] AT SIDBI

INTERVIEW MARKS: 37.50/50

This was my first interview experience with RBI. Like every other aspirant I was so tensed and at the same time excited on entering the gates of my dream organization. On signing the attendance sheet with the security officer I understood that I was 2nd candidate for that day to attend the interview. Being the second candidate, I had no time to sit and relax. Once I reached the floor where interview is to be conducted, I was called for biometric and certificate verification. Once the verification was completed, the first candidate had already entered the board room, so I hardly had 20 minutes to relax myself before giving the interview. I was taking deep breaths meanwhile and finally the bell rang and I was called inside.

10.00 AM – Entered the board room with a smile and looked at each one of them and greeted them.

There was a panel of 5 members [ 1 Chairman + 3 Male Officers + 1 Lady Officer]

C : Tell me about your academic qualification

Me : [Didn’t expect the first question to be this way. It took few seconds for me to realize what I should answer to that]

I had completed my B.Tech in Information Technology from Velammal Engineering College. After my graduation I had worked with an IT concern for 2 years and then I had been working with SIDBI for the past 2 years.

C: [He looked unsatisfied with my answer] Have you read any speech which was given by RBI Governor ?

Me : [I had read the interview transcripts of many candidates and found that this was a common question in most of the interviews so I was prepared for this question]

Yes Sir, I had read the speech on “Banking Regulatory Powers Should Be Ownership Neutral” by the Governor. In the speech the Governor had mentioned that there should be level playing field for both private sector banks and public sector banks [PSB]. He had described how market discipline plays a major role in ensuring that private sector banks performance and also it’s the absence of market discipline that makes the PSBs fall back.

C: You know that RBI is a regulator. Why is a regulator needed?

Me: [Though I was prepared for the question, I couldn’t answer to the point]

Regulators are needed to ensure that the banks in the system are functioning at their optimum level and to monitor them on a regular basis to make sure that they don’t turn insolvent which might inturn affect the economy as a whole. So, it is important that regulator is present in the system to monitor the activities on a regular basis and step in and take necessary actions as and when needed.

C: Have you read the RBI Act?

Me: [Though I have only skimmed through it, I nodded my head]

Yes sir.

C : Do you know the number of sections in RBI Act ?

Me: No sir, I am not able to recollect it.

C : Do you know any books which is written by the serving Governor or the former RBI Governor?

Me: Yes Sir, “I Do What I Do “by Raghuram Rajan.

C : Do you know any other books written by him? There is an important book written by him on Economy.

Me: No Sir, I am unable to recollect it.

[I felt that I did not answer well to the questions of the Chairman. Though I lost my confidence, I kept smiling]

[Passed on to the next panel member]

M1: You have worked in IT concern for 2 years. Can you tell me the difference between Dbase and Oracle.

Me : Dbase is old and the first database management system. It is written using the programming languages of those days like FoxPro. Oracle is a kind of relational database management system which is commonly used now a days. It is more user friendly when compared to dBase and uses programming languages like C and C++.

[My answer was not precisely right. But managed somehow]

M1: What ratio do you look for when you do a credit appraisal?

[I had mentioned in my bio data that I do credit appraisal in SIDBI]

Me: We look for DER, ACR and DSCR mainly when do credit appraisals. Only when a proposal conforms to the guidelines set for these ratios, the proposal is considered for processing.

M1: How much should the DER be?

Me: The DER is expected to be at 3:1 for any project that’s needs financial assistance.

M1: What are the functions of RBI ?

Me : [Most Expected Question] RBI is the Issuer of Currency Notes , Bankers to the banks and to the Government, Controller Of Credit in the economy, Formulates the monetary policy for the country which in turn decides the interest rate in the economy, Custodian Of foreign reserves, Overall Supervision Of the economy and acts as the lender of last resort.

M1 : Which function of RBI lures you the most?

Me: [This Question also was frequently asked in all interviews to candidates as in which department they prefer to work in ]

Formulation of Monetary Policy

M1: Can you tell who are all members of MPC ?

Me : MPC consists of 6 members.

1. Governor of RBI, Ex Officio Chairperson

2. Deputy Governor Of RBI who is Incharge of monetary policy committee [ Ex Officio]

3. One officer of RBI nominated by the Central Board

3 others members are appointed by the government who are experts in the field of finance and economics.

M1: What are the highlights of latest MPC meet ?

Me: MPC had decided to maintain the Repo Rate at 6.5% and the policy stance as ‘Calibrated Tightening’. The MPC also decided to lower the inflation projection to 2.7-3.2% due to normal monsoon and moderate food prices. GDP was also found to slow down to 7.1 % after 4 consecutive quarters of acceleration. IIP growth also slowed down to 4.5 %. The purchasing manager’s index (PMI) for manufacturing touched an eleven-month high of 54.

M1: Do you know the change brought about in the MPC which might lower down the EMI s Of Loan’s?

Me: [Though I didn’t know it I tried answering to it]

M1: No, you are not getting it right.

Me: Sorry Sir, I am unable to recollect it.

[He was mentioning the RBI instruction to banks to link the interest rate to external benchmark instead of MCLR which will reduce the interest rate of EMI payers]

[Passed on to Member 2. I felt little confident after answering questions to M1]

M2: What is difference between greenfield and brownfield?

[Questions Of M2 where mostly related to my work experience at SIDBI]

Me: Greenfield projects refer to the new ventures which are being put forward by the entrepreneurs. Meanwhile brownfield refer to the unit/project which are already in existence.

M2: What are fixed cost and variable cost? Give example for both.

Me: A variable cost is a company's cost associated with the turnover of the company. A company's variable cost increases and decreases with its production volume. When production volume goes up, the variable costs will increase and vice versa.

Example : Cost Of raw materials.

Fixed Cost remains the same even if no goods or services are produced, and therefore, cannot be avoided

Example : Rent given to the factory premises. Even if the unit runs or not the promoter will have to pay the rental expenses which is fixed.

M2: Why NPAs are on the rise ?

Me: Mostly, NPAs are on the rise due to volatile market conditions in domestic and in the global level, sudden change in government policies and failed business decision.

For eg: Exporters find it difficult to compete with the low prices given by Vietnam and Bangladesh. Policies like GST and Demonetisation hurt the small players like MSMEs who are unable to withstand sudden change in their business framework.

M2: Difference between corporate balance sheet and bank balance sheet

Me : Main Difference is that Assets for a Corporate become liability for a bank and liability for a Corporate become Assets for a bank.

Eg: Loans are an asset for the bank but liability for the company and deposits are assets for a company but liability for a bank.

M2: What does a regulator look for in a bank balance sheet ?

Me: A regulator mostly looks for leverage ratio of the bank i.e how well the bank leverages it’s Assets. It also looks at the NPAs and it’s provisioning , Capital Of the bank and Banks Profit. All these parameters are looked for to ensure the health of the bank and to make sure it does not become insolvent . If there are certain issues then regulatory measures are taken.

[Was not sure about this answer. I had answered what blinked my mind at that point]

[Passed on to M3. It was half way through the interview and by now I had become comfortable and more confident]

M3 [Female Member]: You had taken educational loan from SBI ? What is the interest rate of it?

[Since educational Loan was mentioned in my bio data I had prepared well for this part also]

Me: The interest rate is 12.30%.

M3: What are the terms of the educational Loan ?

Me: Educational Loan is given without mortgaging of any collateral, educational assistance is provided for the successive years of college provided there are no arrears in the previous semesters. Principal needs to be repaid only after n+1 years of availing the assistance I.e no of year’s in college + 1.

M3: So, in this case what do you feel is the biggest difference between a Educational Loan and Other loans ?

Me: I understood that she was relating to the last point of my previous answer and I said that educational loans have the highest moratorium (holiday period) out of all the loans.

M3: Yes that’s right ! Why do you think educational loans become NPA?

Me: Mainly educational loans become NPA because of absence of job opportunities. If a student is able to get a job opportunity then the likelihood of repaying the Loan is very high. But now adays especially loans taken for engineering courses are not repaid as the students find it difficult to find a job and even if they are provided with the job , they earn meagre amount with which they are unable to repay their loans.

M3: What is your suggestion to improve Educational Loan ?

Me: Though the interest subsidies are provided for educational loans, I feel that the interest rates of educational loan which is of utmost importance for a nation’s growth should be reduced. Car loans and home loans which sometimes fall into the luxury list are given at 8-9%, I strongly feel that educational loans should also be given at lower interest rate.

M3: Good ! Do you know about MUDRA?

Me: Yes mam. MUDRA stands for Micro Units Development and Refinancing Agency. It was mainly developed to give collateral free loans to MSMEs upto Rs.10 lakh. MUDRA Bank was established as a subsidiary with SIDBI. MUDRA bank refinances to micro finance institutions and NBFCs which further lend to the MSMEs.

M3: Do you feel MUDRA has been able to be a success ?

Me : Yes mam. As per the data from the government about the loan disbursement and as per my interactions with colleagues at the MUDRA I feel that MUDRA has been able to bring about a change in the credit flow to the sections of the society which where earlier not able to avail the institutional credit.

M3: You are saying that NPAs are on the rise. But India has improved its ranking in the world bank s EASE OF DOING BUSINESS INDEX. What do you think about this ?

Me: Yes mam, EDB index is given based on 10 parameters for evaluation. And our ranking can be influenced by India performing well in any one of the parameters also while we lag in other parameters. For eg: Though India has improved its ranking significantly we still rank behind in terms of enforcing contract, providing permits and registration of property. NPA s in many cases are due to stalled projects which are still in want of permits to proceed with their operations. Even when it comes to smaller units like MSMEs , the operations are being stopped due to delay in approvals from governments for pollution, property construction etc.

[Passed on to M4. M3 was very cordial and responded by nodding her head to all the answers]

M4: SIDBI is an All India Financial Institution what if it turns in to Universal Bank ?

Me : Sir, for now SIDBI takes care of credit flow only to the MSME sector. If it is converted into a universal bank then SIDBI will have a larger coverage to lend to retail sector, large corporates , agriculture sector , real estate projects etc:

M4: That is the advantage. What do you think is the challenge here ?

Me: [I was not able to answer it rightly. The member gave a hint to answer the question and I was able to catch hold it from there]

Sir, for now we do not take any deposits from the public. We take only Fixed Deposits and that too it’s of very small proportion. Hence receiving deposits from the public by attractive interest rates will be a challenge and also since we have do not have experience in the field of loans for the other sectors it might be a challenge to venture into the new areas.

M4 : What will happen to the balance sheet of SIDBI if it turns into a bank.

Me: It will become more stronger sir and the size of the balance sheet will increase.

M4: What will happen to the Assets and Liabilities of the bank?

Me: The liabilities will increase because we will start receiving more deposits from the customers and assets side also will see increase as we will be diversifying the loan portfolio.

M4: How will it affect the bottom line of SIDBI?

Me: The bottom line will increase to a sigificant extent sir as we will be leveraging more.

M4: What is the balance sheet size of SIDBI ?

Me: [Though I had prepared , I got blanked out at that point]

Few Thousand Crores Sir.

M4: What are the sources of funds for SIDBI?

Me: From Government of India, RBI, Market Borrowing. Banks which are not able to meet their priority sector lending targets place their funds with RBI under RIDF [Rural Infrastructure Developement Fund] which in turn is given to SIDBI.

M4: What is the cost of borrowing for SIDBI?

Me: One of the funds from Government of India called SMILE FUND is received at 5% which in turn is given to customers at 7-8%.

M4: That is only a small portion of your funding ? What about the rest ?

Me: Sorry sir. I am unable to recollect it.

M4: Ok, What is CRAR Of SIDBI ?

Me: 26.73 Sir.

M4: 26 !! Don’t you think SIDBI Is inefficient ?

Me: No sir, our CRAR is high mainly because we do more of refinance rather than direct finance that is why our CRAR is very high and there is scope for further improvement sir.

Your interview is over. You may leave.

I smiled at all the members and left.

On the whole , I felt that staying confident and humble all throughout the interview is more important. It’s better to say No when we don’t know the answers. Our Bio Data which we submit to RBI is the main source of questions for the panel. So complete  preparation of bio data will be of immense help. Preparation regarding the place of birth, place of work and place of study is also important.

For candidates with work experience it is important to prepare in detail about the organisation with which he / she works. For candidates with no work experience it is important to prepare more about their graduation subject. And obviously preparing about RBI is all the more important for all the candidates.

Going through the interview transcripts of candidates from diverse backgrounds is essential as it will help you understand what is most commonly asked by the panel in all the interviews.