CASA ratio shows what percentage of a bank's total deposits comes from its current and savings accounts. It is calculated using the formula:

CASA Ratio = ((Current Account Deposits + Savings Account Deposits) ÷ Total Deposits) × 100

Why Do Banks Focus on Increasing CASA Ratio?

Savings and current accounts are often the first banking products customers open with a bank. As more customers open and actively use these accounts, the bank's customer base grows, creating opportunities to offer other banking products and services over time.

CASA is more of an everyday banking need, whereas products such as Fixed Deposits (FDs) and Recurring Deposits (RDs) are investment options. As a result, banks may need to offer attractive interest rates and other benefits to compete with other investment options.

Another reason banks focus on CASA is that savings and current accounts do not have a fixed tenure. You can often maintain these accounts for years as part of your everyday banking needs, creating long-term banking relationships. In contrast, products such as FDs and RDs are opened for a specific tenure and mature after that period.

How Do Banks Grow CASA Deposits?

Banks grow CASA deposits in ways that increase their deposits while also benefiting customers. Some of the common ways include:

1. Offer Savings and Current Accounts That Can Be Opened and Operated Online

Digital savings accounts and digital current accounts help banks reach different customer groups. They appeal to tech-savvy customers who prefer a fully digital banking experience while also making account opening simpler for senior citizens who may find repeated branch visits difficult.

Digital account opening also helps banks reach customers in rural and semi-urban areas where a bank may not have a nearby branch.

2. Offer Salary Accounts with No Minimum Balance

Salary accounts help banks on board a large share of customers through tie-ups with companies and organisations. Since salaries are credited every month, these accounts often become the customer's primary banking account. They also generally come with no minimum balance requirement unless they are later converted into a regular savings account.

3. Offer Customer-Specific Account Variants

Banks also offer different savings account variants designed for different customer groups, such as:

• Senior citizen savings accounts
• Women's savings accounts
• Minor savings accounts
• Premium savings accounts

By offering accounts that match different banking needs, banks can attract a wider customer base and strengthen CASA.

4. Offer Current Accounts with Different Transaction Limits

Banks offer current accounts with different transaction limits, features, and minimum balance requirements. This helps banks attract a wider range of businesses and strengthen CASA.

5. Improve Digital Banking Security to Encourage More Digital Participation

Banks continue to strengthen the security of their digital banking platforms to help customers carry out transactions with confidence. Features such as data encryption, multi-factor authentication, secure login methods, instant SMS and email transaction alerts, device management, and real-time fraud monitoring help protect customer accounts and reduce the risk of unauthorised access.

Final Thoughts

CASA reflects the strength of a bank's savings and current account deposit base. While it is not the only factor to consider when choosing a bank, it offers useful insight into its everyday banking operations and deposit profile. This can help you make a more informed banking decision.

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