CASA recovery offers relief, PSBs expect improvement

AFTER HITTING A low in the first quarter of FY26,the CASA (current account, savings account) ratios of banks have started improving from the second quarter. According to data from 29 public and private sector banks, CASA has improved 23 basis points to 36.38%.

- MAHESH NAYAK

Banks, especially state-run ones, are confident that the worst is behind them in terms of CASA. State Bank of India Chairman CS Setty and Punjab National Bank MD and CEO Ashok Chandra said in analysts’ calls that CASA number will gradually improve and the momentum will sustain in the second half of FY26.

Karthik Srinivasan, head, financial sector ratings at ICRA, said: “Incremental growth in CASA deposits has increased in the last two quarters as the gap between savings rates and term deposit rates has narrowed. CASA remix of banks will stabilise at current levels with an upward bias.”

Curtailment of high-cost bulk deposits, waiving minimum balance charges and prudent liability management have helped banks stabilise the CASA ratio.

However, despite this sequential rebound, the year-on-year CASA ratio remains compressed, down 115 bps from 37.53% a year back in the second quarter of FY25 and 250 bps from 38.89% in the second quarter of FY24.

The CASA compression seen across the system in the last 8-10 quarters has been broad based, mainly driven by the rate cycle. During the up-rate phase, banks offered over 8% on term deposits while savings rates stayed around 2.5-3%.