CASA Ratio

Current account and savings account ratio (CASA ratio) is the ratio of deposits across current accounts and savings accounts to the total deposits that a bank has. A higher CASA ratio means a bank has more cheap money. This is because the interest a bank pays out on savings accounts deposits is lower than the interest it gives on other forms of deposits. Also, most current accounts do not pay interest to their account holders. With more cheap money at hand, the bank can give out more loans at a lower cost. If the CASA ratio is low, a bank may have to rely on a costlier source of funds.

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