Banks see funds flowing into current, savings accounts. Bulk deposits are out and Casa current account and savings account is in. Large Indian banks have managed to increase the share of low-cost Casa deposits in their portfolio largely due to a revival in stock markets, economic activity and a fall in term-deposit rates. According to the latest data from banks, public sector banks have seen an increase of around 20 per cent in low-cost deposits during the current financial year In contrast, during the second half of , lower Casa balances, partly due to high deposit rates, had meant that the share of these deposits fell for most banks.
With deposit rates falling to 6. Banks do not pay any interest on current account balances, while savings bank deposits earn 3. But what helped the bank increase the share of Casa in total deposits was a decline in the deposit base as the bank shunned high-cost deposit from companies. Despite turning down or retiring bulk deposits, the mix between retail and Casa deposits was still , the bank said. But the focus on Casa, through steps such as higher minimum balance for savings bank accounts, was not the sole driver.
With companies heading back to markets for initial public offers IPO and placement to institutional investors QIPs , funds were passed on to the banking system for a few days. For public sector banks, the push for Casa comes in the background of the government asking them to provide growth targets for low-cost deposits in their statement of intent for It was a first of its kind move, as in previous years the government used to seek overall deposit growth targets.
The push was aimed at ensuring that banks managed to keep their cost of funds low which, in turn, would help the government push for lower lending rates. In recent months, even the Reserve Bank of India RBI has commented on the falling level of Casa as banks over the last few years became highly dependent on high-cost bulk deposits contracted from companies, including public sector entities.
Over the years, for public sector banks, the share of Casa in total deposits has declined from Deposit rates of the banking system have fallen more than bps in the last one year. SBI, for example, offers 6. The other factor which enabled banks to get low-cost deposits is the expansion of branches. Banks such as SBI and Union Bank of India which opened and branches, respectively, during the first six months, have been benefited from the expansion.
Bankers said that with public and private sector banks on a branch expansion spree, the share of Casa was going to rise further. Upgrade To Premium Services. As a premium subscriber you get an across device unfettered access to a range of services which include:.
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