Cost of funds
Cost of Liabilities
Credit & DebtThe blended average interest a bank pays across all its deposits and borrowings: current accounts at 0 percent, savings at about 3 percent, fixed deposits at about 6.5 percent, and other funding.
Formula
Cost of Funds (%) = Total Interest Paid / Average Interest-Bearing Liabilities x 100
Why it matters
It is the check on a flattering CASA ratio. A high CASA bought with high savings rates shows up as a higher cost of funds, and only the two together tell you whether the bank's money is genuinely cheap.
Indian example
Related terms
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