User talk:Lakshmanpv

Current Account Savings Account (CASA): CASA stands for current and savings account. This is a popular term used in the Indian banking context. The financial strength of of a bank is measured in terms of CASA ratio. The CASA ratio shows how much deposit a bank has in the form of current and saving account deposits in the total deposit.

A higher CASA ratio means higher portion of the deposits of the bank has come from current and savings deposit, which is generally a cheaper source of fund. Many banks don’t pay interest on the current account deposits and money lying in the savings accounts attracts a mere 3.5% interest rate. Hence, higher the CASA ratio better the net interest margin, which means better operating efficiency of the bank.

Net interest margin is difference between total interest income and expenditure and is shown as a percentage of average earning assets. Higher income from CASA will improve the net interest margin as the cost of this fund is relatively lower. For instance, most banks lend at over 10%, whereas, the rate of interest that they pay on saving deposit is just 3.5%. However, actual realisation depends on other expenditure, too.

Current Account Savings Account (CASA)
Current Account Savings Account (CASA): CASA stands for current and savings account. This is a popular term used in the Indian banking context. The financial strength of of a bank is measured in terms of CASA ratio. The CASA ratio shows how much deposit a bank has in the form of current and saving account deposits in the total deposit.

A higher CASA ratio means higher portion of the deposits of the bank has come from current and savings deposit, which is generally a cheaper source of fund. Many banks don’t pay interest on the current account deposits and money lying in the savings accounts attracts a mere 3.5% interest rate. Hence, higher the CASA ratio better the net interest margin, which means better operating efficiency of the bank.

Net interest margin is difference between total interest income and expenditure and is shown as a percentage of average earning assets. Higher income from CASA will improve the net interest margin as the cost of this fund is relatively lower. For instance, most banks lend at over 10%, whereas, the rate of interest that they pay on saving deposit is just 3.5%. However, actual realisation depends on other expenditure, too