CASA share likely bottomed out, to edge higher in FY25
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The share of low-cost deposits - current account and savings account (CASA) - has largely bottomed out and is expected to be in the range of 39-40% of total deposits for the current fiscal, analysts said. For commercial banks, the CASA ratio has declined from 45% in FY22 to 41% in FY24. Bankers and analysts attribute this to the widening gap between interest earned on term deposits and savings accounts. Savings account rates are at around 3-3.5%, while term deposits at their peak give an interest of 7% to 7.75%. The higher share of CASA lowers a bank's cost of overall deposits and thus helps improve the net interest margins. "The share of CASA was higher during Covid because the differential between the savings rate and term deposit rate was narrow, so there was little incentive for people to lock in or commit their funds for a longer tenure," said Anil Gupta, senior vice president at ICRA Ratings. ET Bureau The widespread u...