PrepMaticExam glossary · Bank exams
CASA ratio: meaning, formula and why it matters
On this page
The CASA ratio is the share of a bank's total deposits that sits in Current Accounts and Savings Accounts. A bank with a high CASA ratio gets more of its money from low-cost or zero-cost sources, so it earns a better margin between what it pays for deposits and what it charges on loans.
CASA ratio = (current account deposits + savings account deposits) ÷ total deposits × 100
Worked example
A bank has total deposits of ₹1,00,000 crore. Of these, ₹12,000 crore is in current accounts and ₹28,000 crore in savings accounts. CASA = (12,000 + 28,000) ÷ 1,00,000 × 100 = 40%. The remaining 60% is in term deposits such as fixed and recurring deposits, which pay higher interest.
Why a higher CASA helps
- Current accounts pay no interest. Businesses use them for daily transactions.
- Savings accounts pay a low rate compared with term deposits. Savings account rates have been deregulated since 2011, so banks set them.
- Term deposits pay the most because depositors lock their money in.
More CASA means a lower overall cost of funds, which feeds into the bank's lending rates. It also signals a strong customer franchise, since people use the bank for day-to-day money. On the other hand, CASA balances can be withdrawn at any time, so banks also need stable term deposits for long-term loans. The lending side of this is covered in MCLR, which includes the cost of funds.
Do not confuse CASA with
- CRR: the cash that banks keep with the RBI, see cash reserve ratio.
- Credit-deposit ratio: loans divided by deposits.
How bank exams ask about it
The common stem is "what does CASA stand for" or "CASA ratio is the ratio of ...", often with the other abbreviations above as distractors. Expect formula-based questions with a deposits table, as in the example. It also makes a natural interview question, so know the cost-of-funds explanation. The overview is in banking awareness.
Where to find a bank's CASA ratio
Banks disclose it in quarterly results and investor presentations on their own websites. Take the latest quarter and state the date.
Frequently asked questions
Is a higher CASA ratio always better?
Generally yes for cost, but a very high CASA of volatile deposits can leave a bank exposed if customers withdraw. Analysts also look at the granularity of the deposit base.
Which type of bank usually has the highest CASA?
Large banks with wide branch networks and many salary and business accounts usually report a higher CASA than smaller lenders.
Know which section is costing you the cut-off
Take a free bank-exam assessment on PrepMatic. It shows where you stand in Quant, Reasoning and English, then builds a daily study plan and mock tests focused on your weak subjects.
Start free assessment →Free forever plan · No credit card · 2-minute setupRelated
- MCLRMCLR is the internal benchmark that sets the minimum lending rate of a bank, introduced in April 2016. Components, reset, spread and difference from EBLR.
- Non-performing assetsAn NPA is a loan overdue for more than 90 days. Meaning, SMA stages, substandard, doubtful and loss assets, gross vs net NPA and how banks recover.
- Capital adequacy ratioThe capital adequacy ratio compares a bank's capital with its risk-weighted assets to show how well it absorbs losses. Formula, tiers, worked example.
- EBLREBLR links loan rates to an external benchmark such as the repo rate. Meaning, benchmark options, spread, reset rules and difference from MCLR with example.
- Scheduled bankA scheduled bank is listed in the Second Schedule of the RBI Act, 1934. Meaning, Section 42(6) conditions, types and difference from non-scheduled banks.
More in Bank exams
- Cash reserve ratioCRR is the share of deposits that banks must keep with the RBI in cash. Meaning, legal basis, worked example, how it controls money supply and exam questions.
- Call money marketThe call money market is where banks lend and borrow overnight funds without collateral. Call, notice and term money, participants, WACR and exam facts.
- Basel IIIBasel III is the global banking regulation framework created after the 2008 crisis. Its capital buffers, leverage ratio, LCR and NSFR, and how India applies it.
- Bank rateBank rate is the RBI's standard rate for rediscounting bills and the penalty benchmark for CRR and SLR shortfalls. Meaning, uses and how it differs from repo.
- Cheque truncation systemCTS clears cheques using electronic images and data instead of moving paper. Meaning, how it works, MICR code, benefits, Positive Pay and exam facts.
- BancassuranceBancassurance is the sale of insurance products through bank branches. Meaning, the three models, how banks earn, IRDAI and RBI rules, and exam questions.
- Atal Pension YojanaAPY gives a guaranteed monthly pension of Rs 1,000 to Rs 5,000 from age 60 to unorganised-sector workers. Eligibility, contributions, rules, exam facts.
- CIBIL scoreA CIBIL score is a three-digit number from 300 to 900 that shows your credit history. Meaning, bureaus, what affects it and what it means for bank jobs.