Banking Terms Every Viva Candidate Must Know

 Introduction

Whether you are preparing for a bank job viva, a BCS interview, or any competitive recruitment examination in Bangladesh, having a clear understanding of basic banking terms is essential. Interview boards often ask candidates about common banking concepts to assess their financial knowledge, economic awareness, and understanding of the country's banking system.

Banking terms are not only important for those seeking careers in banks but also for candidates applying to government organizations, financial institutions, and corporate sectors. Familiarity with these concepts demonstrates financial literacy, analytical thinking, and awareness of current economic activities.

In this article, we will discuss some of the most important banking terms that every viva candidate should know. Learning these terms will help you answer interview questions confidently and create a positive impression on the interview board.

CRR in Bangladesh Banking System

CRR, or Cash Reserve Ratio, is the percentage of a bank's total deposits that must be kept as cash reserves with the central bank. In Bangladesh, commercial banks are required to maintain this reserve with the Bangladesh Bank. Banks cannot use this portion of money for lending or investment purposes.

The primary objective of CRR is to control liquidity in the banking system. When the central bank increases the CRR, banks have less money available for loans, which helps reduce excess money circulation and control inflation. Conversely, when the CRR is lowered, banks can lend more money to businesses and individuals, encouraging economic activity and investment.

For example, if a bank receives deposits of Tk. 100 crore and the CRR is 4%, the bank must keep Tk. 4 crore as reserve with Bangladesh Bank. The remaining amount can be used for lending and other banking operations. Therefore, changes in the CRR directly affect loan availability, borrowing costs, and overall economic growth.

 Key Takeaways (CRR)

• Controls excess liquidity in banks
• Helps manage inflation pressure
• Directly affects lending capacity

SLR and Its Role in Banking Stability

SLR, or Statutory Liquidity Ratio, is the minimum percentage of a bank's total deposits that must be maintained in the form of liquid assets such as cash, gold, and approved government securities. Unlike CRR, which must be kept as cash with the central bank, SLR is maintained by the bank itself in specified liquid assets.

The main difference between SLR and CRR lies in where the reserve is held and its form. CRR is maintained as cash with Bangladesh Bank, while SLR can be maintained in cash, gold, or government-approved securities held by the bank. Both are monetary policy tools used to regulate the banking sector, but they serve slightly different purposes.

SLR plays a crucial role in maintaining financial stability. It ensures that banks always have sufficient liquid assets to meet customer withdrawals and other financial obligations. By requiring banks to maintain a portion of their funds in safe and liquid assets, SLR reduces financial risks and strengthens confidence in the banking system.

Key Takeaways (SLR)

• Ensures financial stability of banks
• Helps meet customer withdrawal demands
• Reduces risk of banking failures

Repo Rate and Inflation Control in Bangladesh

The Repo Rate, short for Repurchase Rate, is the interest rate at which the central bank lends money to commercial banks for short-term needs. In India, this rate is determined by the Reserve Bank of India (RBI). When banks face a shortage of funds, they can borrow money from the RBI by providing government securities as collateral.

The repo rate is an important monetary policy tool used to control inflation and economic activity. When the RBI increases the repo rate, borrowing becomes more expensive for banks. As a result, banks often increase their lending rates, making loans costlier for businesses and consumers. This reduces spending and helps control inflation. On the other hand, when the repo rate is reduced, banks can borrow at a lower cost and usually offer cheaper loans, encouraging investment and consumption.

For example, during periods of high inflation, the RBI may raise the repo rate to reduce excess money circulation. Conversely, during an economic slowdown, it may lower the repo rate to encourage borrowing, business expansion, and economic growth.

Key Takeaways (Repo Rate)

• Affects loan interest rates
• Controls inflation and money supply
• Influences business investment activity

Inflation Impact on Purchasing Power

Inflation is the general increase in the prices of goods and services over time. When inflation rises, the same amount of money buys fewer products than before. In simple terms, inflation reduces the purchasing power of money. For example, if a kilogram of rice costs Tk. 60 today and Tk. 70 next year, inflation has occurred.

There are two major types of inflation. Demand-pull inflation happens when consumer demand for goods and services increases faster than supply. As more people compete to buy limited products, prices rise. Cost-push inflation, on the other hand, occurs when production costs such as wages, fuel, or raw materials increase, forcing businesses to charge higher prices.

Inflation has a significant impact on both consumers and the economy. High inflation reduces purchasing power, making everyday necessities more expensive. It can also decrease the real value of savings if interest earned on deposits is lower than the inflation rate. Therefore, controlling inflation is an important responsibility of central banks and governments to maintain economic stability.

Key Takeaways (Inflation)

• Reduces purchasing power
• Increases cost of living
• Affects savings value

GDP Growth and Economic Development in Bangladesh 

Gross Domestic Product (GDP) is the total monetary value of all final goods and services produced within a country’s borders during a specific period, usually a year or a quarter. It is one of the most important indicators used to measure the size and health of an economy.

GDP plays a key role in measuring economic growth. When GDP increases over time, it indicates that a country is producing more goods and services, creating more jobs, and improving income levels. Economists and policymakers use GDP trends to evaluate whether an economy is expanding or slowing down and to make decisions about taxation, spending, and monetary policy.

There are two main types of GDP: nominal GDP and real GDP. Nominal GDP measures the value of goods and services at current market prices without adjusting for inflation. Real GDP, on the other hand, adjusts for inflation, providing a more accurate picture of actual economic growth over time. Therefore, real GDP is generally preferred when comparing economic performance across different years.

Key Takeaways (GDP)

• Measures economic growth
• Reflects job creation and production
• Helps policy planning

Conclusion

Understanding key banking and economic terms such as CRR, SLR, repo rate, inflation, and GDP is extremely important for viva candidates preparing for bank jobs and competitive examinations in Bangladesh. These concepts are frequently discussed in interviews because they reflect a candidate’s awareness of the financial system and overall economic environment.

A strong grasp of these terms not only helps you answer technical questions confidently but also improves your ability to understand real-world economic changes. That is why staying updated with daily economic news, central bank policies, and national financial trends is highly recommended for every serious candidate.

Remember, interviews are not just about memorizing facts—they are about showing clarity of thought and confidence in communication. If you understand the basics well and stay informed, you will naturally stand out from others. Believe in your preparation, stay consistent, and walk into your viva with confidence—the right knowledge always speaks for itself.

Your next bank viva success starts with the right preparation—follow BDjobcircular.com and stay ahead of the competition.

FAQ Section

Q: Why are banking terms important for viva exams?

Ans : They help interviewers assess your financial knowledge and economic awareness.

Q: What is the difference between CRR and SLR?

Ans: CRR is kept with the central bank in cash, while SLR is maintained by banks in liquid assets.

Q: How does repo rate affect common people?

Ans: It affects loan interest rates, making borrowing cheaper or costlier.

Q: Does inflation affect savings?

Ans: Yes, high inflation reduces the real value of savings.

Q: Why is GDP important?

Ans: It shows the economic performance and growth of a country.

For more bank viva preparation resources, read our Top 50 Bank Viva Questions & Answers (2026) and How to Prepare for Bank Viva Exams in Bangladesh to maximize your chances of success.