If you’ve ever prepared for a BFSI interview, you know it’s not just about reading definitions or remembering ratios. To help you prepare smarter, we’ve put together the most important BFSI Interview Questions along with model answers.
1. What is BFSI?
BFSI stands for Banking, Financial Services, and Insurance. BFSI is the backbone of any economy, handling savings, lending and investing. From commercial banks to fintech startups, the BFSI umbrella covers everything related to money flow and financial stability.
2. Why is the BFSI sector important to India’s economy?
Because it fuels growth. Banks fund businesses, insurance protects assets, and investment services build wealth. Without BFSI, there’s no credit, no security and no progress.
3. What are the key verticals under BFSI?
Commercial banking, NBFCs, insurance (both life and general), mutual funds, and fintech. Each plays a distinct role. For instance, NBFCs often reach customers traditional banks can’t.
4. How has technology changed BFSI in the last few years?
UPI, AI-based credit scoring and mobile-first banking amongst others have made financial services faster, cheaper and more inclusive. Fintech has blurred the line between tech and finance forever.
5. What is the difference between banks and NBFCs?
Banks can accept demand deposits and are part of the payment system. NBFCs can’t, but they serve niche credit markets ,like vehicle loans, housing finance or micro-lending.
6. What does the RBI do?
The Reserve Bank of India regulates monetary policy, manages inflation and ensures the stability of the financial system. It acts like the “banker’s bank” and keeps everyone in check.
7. Can you explain what CRR and SLR mean?
CRR (Cash Reserve Ratio) is the portion of deposits that banks keep with the RBI. SLR (Statutory Liquidity Ratio) is the percentage they must maintain in liquid assets like gold or government securities. Both keep liquidity under control.
8. What’s the meaning of NIM (Net Interest Margin)?
It’s a profitability metric for banks . The difference between interest income and interest expense as a percentage of earning assets. High NIM means the bank is earning well from its lending business.
9. How do interest rate changes impact BFSI companies?
When rates go up, loan demand falls but deposit returns rise. So, banks earn more on loans but may lose borrowers. Insurance and investment companies also adjust their products accordingly.
10. What is a Non-Performing Asset (NPA)?
An NPA is a loan that hasn’t been repaid for 90 days or more. It’s a key sign of credit quality. High NPAs are a red flag for banks and investors alike.
11. Why is financial modelling important for BFSI jobs?
Financial modelling helps you project a company’s performance, analyze risk, and make investment decisions. If you want to work in investment banking or equity research, a solid financial modelling course is a good starting point.
12. What is the difference between life insurance and general insurance?
Life insurance deals with the life risk of the insured person. General insurance protects assets like cars, homes, or health.
13. What are derivatives and why do they matter?
Derivatives are financial instruments whose value depends on an underlying asset — like a stock or commodity. They help manage risks and are also used for trading strategies.
14. What’s the biggest challenge in BFSI today?
Cybersecurity. With everything going digital, data protection is non-negotiable. Add to that changing regulations, fintech competition, and evolving customer expectations — it’s a tough but exciting space.
15. What skills make someone successful in BFSI?
A mix of technical and soft skills . Financial understanding, analytical thinking, and communication. Taking BFSI certification courses can help polish those skills in a structured way.
16. What is a credit rating?
It’s a score that shows how likely someone is to repay a loan. Higher rating equals lower risk equals better loan terms.
17. How does inflation affect BFSI operations?
Inflation changes interest rates, investment patterns, and loan demand. Banks need to adjust quickly else otherwise, margins get squeezed.
18. What’s the difference between savings and current accounts?
Savings accounts are for individuals to save and earn interest. Current accounts are for businesses to manage high-volume transactions, usually without interest.
19. How do mutual funds work?
They pool money from different investors and invest in securities like stocks and bonds. They’re managed by professionals, giving small investors access to diversified portfolios.
20. What is Basel III?
Basel III is an international banking regulation framework designed to make banks safer through better capital and liquidity management.
21. What is risk management in banking?
It’s how banks protect themselves from losses that is by managing credit, operational and market risks.
22. What is microfinance and why is it important?
Microfinance provides small loans and financial products to people who can’t access traditional banking more often to women or small entrepreneurs.
23. What are the career opportunities in BFSI?
Job opportunities range from relationship managers to data analysts to compliance officers. With fintech growing, there are even more options.
24. How does financial wellness fit into BFSI?
Financial wellness helps people manage their money better . This includes budgeting, saving, investing and planning. Many firms now run financial wellness programs for employees to improve overall financial literacy and mental health.
25. Why should someone one join the BFSI industry?
To be part of an industry that creates real impact. It’s dynamic, challenging, and directly affects the economy.
