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- NEXT DEFINITIONCash Reserve RatioCash Reserve Ratio is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves with the central bank.Read More
What is 'CASA'
Definition: CASA stands for Current Account and Savings Account which is mostly used in West Asia and South-east Asia. CASA deposit is the amount of money that gets deposited in the current and savings accounts of bank customers. It is the cheapest and major source of funds for banks. The savings accounts portion pays more interest compared to current accounts.
Description: Banks offer mainly two types of accounts. These could be term deposits- like fixed or recurring deposits or non-term deposits - like current or savings accounts.
A term deposit is valid for a fixed period of time and in return the bank pays interest at a fixed rate with the condition that you do not touch the money in the interim. For example, you put in Rs 10,000 in a fixed deposit for a period of seven years and the bank pays you an interest at the rate of 12 per cent per annum.
On the other hand, current and savings accounts are used for daily operations and are valid as long as the customer wants them to be. They have lower interest rates than term deposits depending on the bank’s terms and conditions. For example, in an urban area ICICI Bank pays 4.0 per cent interest on a savings account with cheque book on a minimum balance of Rs 10,000.
Since interest rates are lower than term deposits, CASA is a cheaper source of funds for banks. For this reason, financial experts also look at CASA ratio to understand a bank’s financial health, as the same reflects the bank’s capacity to raise money with lower borrowing costs.
Description: Banks offer mainly two types of accounts. These could be term deposits- like fixed or recurring deposits or non-term deposits - like current or savings accounts.
A term deposit is valid for a fixed period of time and in return the bank pays interest at a fixed rate with the condition that you do not touch the money in the interim. For example, you put in Rs 10,000 in a fixed deposit for a period of seven years and the bank pays you an interest at the rate of 12 per cent per annum.
On the other hand, current and savings accounts are used for daily operations and are valid as long as the customer wants them to be. They have lower interest rates than term deposits depending on the bank’s terms and conditions. For example, in an urban area ICICI Bank pays 4.0 per cent interest on a savings account with cheque book on a minimum balance of Rs 10,000.
Since interest rates are lower than term deposits, CASA is a cheaper source of funds for banks. For this reason, financial experts also look at CASA ratio to understand a bank’s financial health, as the same reflects the bank’s capacity to raise money with lower borrowing costs.
- PREV DEFINITION
- NEXT DEFINITIONCash Reserve RatioCash Reserve Ratio is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves with the central bank.Read More
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Bandhan Bank introduces new savings product 'avni' exclusively for womenBandhan Bank has introduced 'avni', a savings product specifically for women, aiming to increase current and savings account deposits. Targeted at affluent women, it offers benefits like free airport lounge access and personal insurance. A loyalty program has also been launched. The bank’s deposits grew by 23% year-on-year but CASA growth was slower at 14%.
Banks need to devise new strategies to attract depositors: Financial services secretary Vivek JoshiIndian banks need new strategies to attract depositors despite the current level of low-cost deposits being comfortable. Financial services secretary Vivek Joshi highlighted that CASA deposits, which were at 41% of total deposits, have seen a decrease from 45% in previous years. Joshi confirmed the government's ongoing plan to privatize two state-run banks and one general insurer. Although state-owned insurers showed improvements, further capital support is deferred. The government is also working on in-house credit assessment capabilities for MSMEs by PSBs and exploring a new credit model. Additionally, the budget includes a 3% interest subvention on education loans of up to ₹10 lakh, benefitting 100,000 students annually.
BoB loan book grows 8% in Q1; IndusInd's net advances up 16%The bank's CASA ratio fell to 36.7% at the end of June 2024 from 39.9% a year ago, disclosures made by the bank showed. Retail deposits and deposits from small business customers amounted to ₹1.74 lakh crore as of June 2024, up from ₹1.69 lakh crore in March 2024, the bank said.
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Bandhan Bank shows strong growth in deposits and Advances for JuneBandhan Bank reported significant growth with loans & advances reaching Rs 1,25,619 crore in June 2024, a 21.8 per cent year-on-year increase from June 2023's Rs 1,03,169 crore. Total deposits grew 22.8 per cent to Rs 1,33,203 crore, up from Rs 1,08,480 crore in June 2023. CASA deposits climbed by 13.8 per cent to Rs 44,453 crore while bulk deposits increased 31.6 per cent to Rs 41,099 crore. The retail to total deposits ratio fell from 71.2 per cent in June 2023 to 69.1 per cent in June 2024, and the CASA Ratio decreased from 36.0 per cent to 33.4 per cent.
Bandhan Bank shows strong growth in deposits and Advances for JuneLeading private bank Bandhan Bank has reported impressive year-on-year growth in loans & advances, reaching Rs 1,25,619 crore in June 2024, marking a 21.8 per cent surge from the previous year's figure of Rs 1,03,169 crore.
Banks need to push CASA for deposit growth and protect marginsAt the system level, the share of low cost CASA- Current and Savings Accounts - deposits have dipped 271 basis points ( one bps is 0.01 percent) bps year-on-year in Q4 of FY’2023-24 . This means that banks need to focus on CASA for improving margins as these are very cheap source of funds for banks compared to term deposits.
Legacy issues behind us, PNB on right path to outperform its competition: MD Atul Kumar GoelPNB, led by Atul Kumar Goel, achieved a 229% profit growth to Rs 8,245 crore in FY24. Initiatives like reducing NPAs, improving ROA, and expanding branches contribute to the bank's success.
Credit growth to be between 11-12% for next financial year: Atul Kumar Goel, PNBFor the current financial year 24-25, we have set a target of around 57% and remaining 43% will be the corporate advance because we are one of the largest bank of the country.
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