CASA deposits denote current account and savings account deposits which are offered by the banks. These two deposits are called in the banking parlance as no cost and low cost deposits respectively. Financial Service Company which is registered under banking Regulation Act 1939 is eligible to offer these types of deposits. These deposits are offering around 3 to 3.5% interest to the depositors as against the fixed deposits and recurring deposits which are costlier to the banks. When these deposit funds are utilized for loans and advances, bank is able to earn a higher margin and the minimum interest spread for every bank will be around 4.5%. Taking the example of Syndicate Bank, this study attempts to visualize how much is the impact of growth of CASA deposits and how it helps the banks increase their interest spread and thereby enhancing their profitability.
Cite this article:
B. Janakiraman. Impact of Casa Deposit Growth on the Profitability of Banks-Study of Syndicate Bank. Asian Journal of Management. 2018; 9(2):978-982. doi: 10.5958/2321-5763.2018.00154.3