If you don’t know what is CASA in banking, then worry not! I also didn’t know about this term until last week. My banker friend told me that CASA stands for Current Account and Savings Account which is generally used in Southeast Asia and West Asia.
The amount of money that gets deposited in the current and savings accounts of bank users is referred to as a CASA deposit. It’s the major and cheapest source of funds for banks. The savings accounts portion pays more interest compared to current accounts.
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Non-term deposits like savings or current accounts.
A term deposit is valid for a certain period and in return, the bank pays interest at a fixed rate with the condition that you won’t withdraw the money during this period. For instance, you deposit Rs. 20000 in a fixed deposit for five years and the bank gives you interest at the rate of 10% p.a. in return.
On the other hand, current and savings accounts are valid as long as you want them to be and they are basically used for daily operations. They have lower interest rates than term deposits depending on the terms and conditions of banks. For instance, in an urban area, ICICI Bank offers 4% interest on savings accounts.
CASA is a cheaper source of funds for banks since their interest rates are lower than term deposits. This is why financial experts also look at the CASA ratio to understand the financial health of the bank as it reflects the capacity of the bank to raise money with lower borrowing costs.
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What is CASA?
Madhav
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2 Year
2022-05-09T19:34:57+00:00 2022-05-11T19:00:56+00:00Comment
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