CASA stands for current and savings account. Different kinds of deposits ” current account, savings account and term deposits ” form the major source of funds for banks. The CASA ratio shows how much deposit a bank has in the form of current and saving account deposits in the total deposit.
11 December 2009
For little more understanding....A higher CASA ratio means higher portion of the deposits of the bank has come from current and savings deposit, which is generally a cheaper source of fund. Many banks donot pay interest on the current account deposits and money lying in the savings accounts attracts a mere 3.5% interest rate. Hence, higher the CASA ratio better the net interest margin, which means better operating efficiency of the bank.
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