CASA share likely bottomed out, to edge higher in FY25

The higher share of CASA lowers a bank's cost of overall deposits and thus helps improve the .

"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 .

The widespread use of is also prompting depositors to keep a good balance in their savings accounts for their payments to go through, hence structurally improving the CASA ratio.

"Pre-digitisation, people used to keep some cash with them, now everyone pays via UPI. Many people have their mutual fund systematic investment plans (SIPs) getting triggered from their savings account, so it is unlikely that the CASA ratio would fall from the current level," Gupta said.

"I expect CASA to remain the same, coming down won't affect (CASA ratio), it's unlikely. The rate cut has to be accompanied by a decline in competition for deposits," said Madan Sabnavis, chief economist at .

CASA deposits are the cheapest source of funds and have an element of stability in the liability profile of a bank. Other deposits like term deposits or bulk deposits, apart from being expensive with their high interest rates, are also subject to renewal and outflow risks.

As of March 2024, the CASA ratio for both and public sector banks stood at 41%. In March 2023, private banks had a CASA ratio of 45%, while for public sector banks, it stood at 42%.