The CASA saga

Banks borrow money in the form of deposits and then lend it. The difference between borrowing and lending rates earns banks a spread or a margin. Primarily, banks have two types of deposits - term and non-term deposits. The fixed deposit is an example of a term deposit wherein the bank promises a certain interest rate for a certain period of time. On the other hand, non-term deposits refer to the money lying in the current or savings accounts and earns zero or small interest to the depositor. The CASA (current/savings account deposits to total deposits) ratio is an important analytical parameter for banks. The higher this ratio, the