CASA Ratio — Banking Glossary · BankAI.fyi
Current Account + Savings Account deposits as a % of total deposits. The higher the CASA ratio, the cheaper a bank's cost of funds — and the stronger its NIM.
What is CASA?
CASA stands for Current Account, Savings Account — the two types of low-cost deposits that banks hold. Unlike Fixed Deposits (FDs), current accounts pay zero interest and savings accounts pay 2.7–4% per year. Compare that to FDs at 6.5–7.5%, and you understand why CASA matters so much.
CASA Ratio = (CASA Deposits ÷ Total Deposits) × 100
Why it matters
A bank with a high CASA ratio has a structural cost advantage. It funds its loan book cheaply — which directly expands Net Interest Margin (NIM).
Think of it this way:
- A bank funding at 4% (high CASA) and lending at 10% earns a 6% spread
- A bank funding at 6.5% (low CASA, more FDs) and lending at 10% earns only 3.5%
Same lending rate. Dramatically different profitability.
Indian banking benchmarks (FY26)
| Bank | CASA Ratio |
|---|---|
| Kotak Mahindra | ~46% |
| HDFC Bank | ~38% |
| ICICI Bank | ~40% |
| Axis Bank | ~42% |
| SBI | ~43% |
| IndusInd Bank | ~37% |
Higher is generally better. But watch for mix shifts — rapidly falling CASA often signals deposit stress.
What moves CASA
- Current accounts come from business relationships, salary accounts, and current account banking
- Savings accounts come from retail banking — especially digital channels (Kotak811, HDFC SmartHub)
- High CASA banks invest heavily in retail liability franchises, branch networks, and salary partnerships
The CASA trap to watch for
A falling CASA ratio during rising interest rate cycles is a warning sign. When FD rates go up, customers shift savings to fixed deposits for higher yield. Banks that relied on cheap CASA to fund their loan book suddenly face higher funding costs — squeezing NIM.
This is exactly what happened across Indian private banks in FY23–24 as the RBI hiked rates aggressively.
For credit analysts
When assessing a bank:
- Is CASA stable or declining over 3+ years?
- Is the CASA mix shifting toward current accounts (better) or savings (more vulnerable to rate cycles)?
- How does the bank’s CASA ratio compare to its stated NIM guidance?
A bank claiming NIM expansion with a falling CASA ratio deserves scrutiny.