Last updated: October 8, 2026

The Scale I to Scale II interview tests whether you can be trusted with credit decisions. Panels at this level ask about four things:

• loan appraisal, especially MSME;
• SMA and NPA management and recovery;
• KYC and customer-protection rules;
• the schemes your branch actually delivers.

Below are 32 questions in those areas with model answers you can adapt. Use your own branch’s figures wherever an answer calls for numbers. For what panels are told to assess and how much the interview counts at each bank, see the bank promotion interview guide.

Opening questions

1. Introduce yourself.

“I joined the bank in [year] as [designation] and have worked at [branches], including [x] years in a rural branch. In my present posting I handle [loans/deposits/clearing], with sanctioning powers up to [₹]. This year our team improved [one metric] from [x] to [y]. I’ve completed JAIIB and CAIIB, and I’m ready to take full responsibility for credit decisions and staff at the Manager level.” Keep it to about 90 seconds.

2. Give us your branch’s key numbers.

Cover total deposits and the CASA share, advances and the credit-deposit ratio, priority-sector lending achievement, gross NPA and this year’s recovery, and the top three products. Panels note candidates who don’t know these, so give exact current figures, not rounded guesses.

3. What is your biggest contribution in your present scale?

Choose one measurable result, such as a recovered NPA, a CASA drive, an audit closure or a scheme target. Describe it as situation, what you did, and the result in rupees or numbers. Say plainly which part was yours.

4. Why do you want to be promoted?

Link it to responsibility, not pay. “I already appraise proposals up to my powers and supervise two staff. At Scale II I can sanction larger credit and take charge of a branch or a department, and I want to be accountable for the outcomes.”

Credit appraisal and MSME

5. How do you assess working capital for a small MSE borrower?

For MSE borrowers with fund-based working-capital limits up to ₹5 crore, RBI requires the turnover method as the minimum. The working-capital requirement is taken as 25% of projected annual turnover. The bank finances at least 20% of turnover and the borrower brings 5% as margin.

Then validate the projected turnover against past sales, GST returns and bank-account credits. Larger borrowers are assessed on the cash-budget or MPBF method under the bank’s loan policy.

6. What do you look at in a term-loan proposal?

Five areas:

• the promoter’s background and stake;
• technical feasibility;
• project cost against means of finance, including the promoter’s contribution;
• repayment capacity, measured by DSCR against the bank’s benchmark (most policies want an average of around 1.25–1.5) and break-even;
• security, insurance and the statutory clearances.

Mention the specific checks you run, such as CIC reports and the CRILC or defaulter lists.

7. Up to what amount can you not ask an MSE borrower for collateral?

For loans to micro and small enterprises sanctioned or renewed on or after 1 April 2026, banks must not insist on collateral up to ₹20 lakh. A bank may go up to ₹25 lakh for units with a good track record under its own policy.

Gold or silver offered voluntarily by the borrower isn’t a breach of this rule. Above the limit, CGTMSE cover can replace collateral.

8. What is CGTMSE, and what is its ceiling?

It is the Credit Guarantee Fund Trust for Micro and Small Enterprises. It guarantees collateral-free credit to MSEs in return for an annual guarantee fee. Since April 2025 it covers credit facilities of up to ₹10 crore per borrower. The guarantee percentage depends on loan size and borrower category.

9. Explain Mudra loans.

These are loans under PM Mudra Yojana for non-farm income-generating micro enterprises, in four categories:

• Shishu: up to ₹50,000.
• Kishore: up to ₹5 lakh.
• Tarun: up to ₹10 lakh.
• Tarun Plus: up to ₹20 lakh, for borrowers who have repaid a Tarun loan.

Mention your branch’s Mudra numbers and how you monitor end-use.

10. What is PM Vishwakarma?

It is a scheme for traditional artisans and craftspeople that offers collateral-free credit in two tranches, ₹1 lakh and then ₹2 lakh, at a concessional 5% interest rate. The Government pays the interest subvention. It also includes skill training and a toolkit incentive.

11. What is Stand-Up India?

Bank loans of ₹10 lakh to ₹1 crore for greenfield enterprises set up by SC/ST or women entrepreneurs. Each bank branch is expected to finance at least one of each category.

12. How do you make sure loan funds are used for the sanctioned purpose?

• Pay suppliers directly where possible.
• Run pre- and post-disbursement inspections.
• Collect stock statements and match them with GST data.
• Watch the account for routing of sales and for round-tripping.
• Get stock audits for larger limits.

Red flags include cash withdrawals soon after disbursement, transfers to related parties, and sales routed through another bank.

Charges and securities

13. Pledge, hypothecation and mortgage: what’s the difference?

• Pledge: possession of movable goods passes to the bank.
• Hypothecation: a charge on movables while the borrower keeps possession.
• Mortgage: transfer of an interest in immovable property. An equitable mortgage is created by deposit of title deeds; a registered mortgage needs a registered deed.

14. How do you register a charge, and why does it matter?

A charge created by a company must be registered with the Registrar of Companies within 30 days (with extensions for a fee). Security interests are also registered on CERSAI. Registration protects the bank’s priority against later creditors and a liquidator. An unregistered charge is void against them.

15. A borrower’s stock statement looks inflated. What do you do?

• Carry out a surprise physical verification.
• Recompute drawing power on the actual stock.
• Recover any excess drawing.
• Record the lapse in the inspection report.

If it looks deliberate, escalate it as an early-warning signal rather than settling it informally.

SMA, NPA and recovery

16. What are the SMA categories?

For loans other than revolving facilities:

• SMA-0: principal or interest overdue for 1–30 days.
• SMA-1: overdue for 31–60 days.
• SMA-2: overdue for 61–90 days.

Cash credit and overdraft accounts are classified by how long they have been out of order. Large exposures are reported to CRILC. Describe what you do at each stage: contact the borrower, find the cause of stress, restructure if viable, and step up follow-up.

17. When does a loan become an NPA?

• Term loan: interest or instalment overdue for more than 90 days.
• Cash credit or overdraft: out of order for more than 90 days.
• Crop loan: overdue for two crop seasons (short-duration crops) or one season (long-duration crops).

An NPA stays substandard for up to 12 months, then becomes doubtful, and is classed as a loss asset when the loss is identified.

18. An account has just slipped to NPA. What will you do?

• Meet the borrower and find the reason.
• Check that documents and limitation are in order.
• Assess the value of the security.
• Choose the route: an upgrade by regularising, a restructure if eligible, an OTS within policy, or legal action (SARFAESI, DRT or Lok Adalat, depending on amount and security).
• Record every follow-up.

19. Walk us through SARFAESI.

• When it applies: not to debts below ₹1 lakh, or where the outstanding is less than 20% of principal and interest.
• Demand notice: a 60-day notice under Section 13(2).
• Borrower’s objection: the bank must reply within 15 days.
• Possession: a possession notice under Section 13(4), with the help of the Chief Metropolitan Magistrate or District Magistrate under Section 14 if needed.
• Sale: valuation, a reserve price and a public auction.

The borrower can appeal to the DRT under Section 17.

20. When do you file at DRT, and when at Lok Adalat?

DRTs hear recovery cases of ₹20 lakh and above. Lok Adalats suit smaller, compromise-friendly cases, and a settlement there is final and binding. Civil courts handle what falls below the DRT threshold and isn’t settled.

21. Who is a wilful defaulter?

Under RBI’s 2024 Master Direction, a borrower or guarantor with outstanding of ₹25 lakh or more who defaults deliberately. That means they have the capacity to pay but don’t, divert or siphon funds, or dispose of security without consent.

The bank’s identification committee issues a show-cause notice and gives the borrower a chance to respond. A review committee confirms the classification.

Deposits, KYC and customer protection

22. How often is re-KYC due?

At least once every 2 years for high-risk customers, 8 years for medium-risk and 10 years for low-risk, counted from account opening or the last KYC update.

23. How many nominees can a depositor have now?

Up to four, since 1 November 2025 under the Banking Laws (Amendment) Act, 2025. For deposits they can be simultaneous, with shares adding up to 100%, or successive, in order of priority. For lockers and safe-custody articles, only successive nomination is allowed.

24. A customer reports an unauthorised electronic debit. What is the bank’s liability?

• Bank’s own deficiency: the customer has zero liability.
• Third-party breach reported within three working days: zero liability.
• Reported within four to seven working days: liability is limited to a capped amount.

The bank must credit the amount, as a shadow credit, within 10 working days of the report. Block the channel first, then register the complaint.

25. What is an unclaimed deposit, and what happens to it?

A deposit with no customer-induced operation for 10 years is transferred to RBI’s Depositor Education and Awareness (DEA) Fund. The customer can still claim it from the bank at any time, with interest where applicable, and the bank reclaims the money from the Fund.

26. What would make you file a suspicious transaction report?

Typical signs:

• transactions out of line with the customer’s profile;
• structuring to stay below reporting limits;
• quick in-and-out flows through a new account;
• third-party cash deposits into many accounts.

Report internally to the principal officer, who files the STR with FIU-IND. Never tell the customer.

Situational questions

27. A borrower offers you a gift after sanction. What do you do?

Decline politely, and report it if the borrower presses or it recurs, as the conduct rules require. The panel is checking that you name the rule without hesitating.

28. Your Branch Manager asks you to process a proposal with incomplete documents because “the party is known”. What do you do?

Explain the gap and the risk respectfully. Offer to fast-track it once the documents are in, and if pressed, ask for the instruction in writing. Don’t refuse rudely, and don’t comply quietly.

29. A senior-citizen customer is upset after waiting an hour. How do you handle it?

• Apologise and serve them yourself.
• Find out why the queue built up.
• Point them to doorstep banking and senior-citizen counters.
• Fix the staffing or process issue so it doesn’t repeat.

30. Your branch is behind on its Mudra target in March. What do you do?

Work through the pipeline and pending applications. Hold a camp with local trade bodies, call existing customers who are eligible, and ask for help from the RSETI or the district authorities. Don’t compromise on appraisal to hit a number.

31. You notice a colleague repeatedly overriding system alerts. What do you do?

Check the facts first. Then raise it with the colleague, and with the Branch Manager or the control function if the pattern continues. Overriding alerts without reasons is a classic precursor to fraud.

32. If promoted, you may be posted to a remote rural branch. How do you feel about that?

Accept it plainly: rural postings are part of the career path, and several banks make rural service a condition for later promotions. Mention what you’d focus on there, such as KCC, SHGs and financial inclusion.

Before the interview

Refresh your bank’s latest quarterly results and the most recent RBI monetary policy statement, as panels often open or close with them. Re-read your bank’s circulars from the past year on credit, recovery and KYC. Above all, rehearse questions 1–4 until your branch numbers come out without hesitation. For the written test, which decides who gets an interview, our Scale I → II course covers the syllabus chapter by chapter, and the free Scale I→II mock test shows the level.

Frequently asked questions

Related

• Bank promotion interview guide — marks by bank and 40 sample questions
• Scale I to Scale II promotion exam — free mock test
• PNB promotion policy 2026-27
• Bank of India promotion policy for officers
• Canara Bank promotion policy