What is CASA

CASA means current and savings account ratio, CASA ratio is an important factor when it comes to looking into the P & L and balance sheet of the bank. In simple words CASA ratio tells how much current and saving account deposits bank has out of total deposits.

Since bank has to give lower rate of interest on saving and current deposits when compared to term deposits and that is the reason why a higher CASA ratio is a good sign when it comes to profitability of the bank, but on the flip side a higher CASA ratio would mean that liquidity position of the bank may not be that good as current and saving deposit can be withdrawn more frequently and easily as compared to term deposits.

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