BANKING AFFAIRS

Detailed explanation-1: -CASA ratio stands for current and savings account ratio. CASA ratio of a bank is the ratio of deposits in current and saving accounts to total deposits.

Detailed explanation-2: -The CASA ratio indicates how much of a bank’s total deposits are in both current and savings accounts. The ratio can be calculated using the following formula: CASA Ratio = CASA Deposits ÷ Total Deposits.

Detailed explanation-3: -Current and Savings Account, or CASA, deposits are cheaper money that banks raise from depositors. These deposits help a bank lower its cost of funds compared with the relatively expensive term deposits. Term deposits carry higher interest (5-7% currently) than current and savings account deposits (3-4%).

Detailed explanation-4: -CASA stands for Current Account Saving Account. This is a unique feature which banks offer to their customers to make them keep their money in their banks. The account combines the benefits of savings account and checking accounts.

Detailed explanation-5: -The current account and savings account ratio measures the proportion of a bank’s total deposits that are held in the form of current or savings accounts. Given the low or zero interest paid on such accounts, a high ratio is usually good news for the bank.