CASA Ratio
Current Account and Savings Account Ratio
The CASA ratio is the share of a bank's total deposits that sits in current and savings accounts, the cheapest money a bank can raise.
Formula
CASA
CASA (%) = (Current Account + Savings Account Deposits) ÷ Total Deposits × 100
Benchmark: Higher is better; always read it together with cost of funds
Reading the number
Total deposits include fixed deposits, current accounts, savings accounts, inter-bank deposits, and every other form of funding. Current accounts pay 0 percent interest and savings accounts pay roughly 3 to 4 percent. That is extremely cheap money.
The spread math shows why it matters. A bank funded by fixed deposits at 7 percent and lending at 11 to 12 percent earns about 4 percent. A bank funded by savings accounts at 4 percent and lending at 12 percent earns 8 percent. Double the earning, from the same loan book.
There is an interest rate lifecycle. New banks pay high savings rates to attract CASA. As a bank establishes itself, it cuts them. SBI, the most established, pays about 3 percent; ICICI and HDFC Bank about 3.5 percent; IDFC First has paid 6.5 to 7 percent precisely because its CASA ratio is low and it needs current and savings accounts.
Indian example
Related ratios
Glossary terms
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