CASA Ratio (current and savings account ratio) in Banking

CASA ratio, measuring current and savings accounts to total deposits, reflects a bank's funding cost. Higher CASA indicates cheaper funds, as these accounts offer lower interest rates compared to fixed deposits.

CASA deposits are relatively stable and readily available, boosting a bank's liquidity and profitability. However, a very high CASA ratio might suggest lower customer engagement with long-term investments.

Banks manage CASA by offering competitive rates and features on both CASA and term deposit products to balance short-term liquidity with long-term funding needs.

A healthy CASA ratio is crucial for banks, as it reduces reliance on expensive fixed deposits and promotes financial stability.

Monitoring CASA ratio helps investors assess a bank's profitability and risk profile, indicating its ability to generate income and manage its funding sources effectively.