‘Low CASA ratios, FD decline raise deposit stability risks for banks’

A “structural shift” in deposit composition due to a decline in fixed deposits and lower share of current and savings accounts (CASA) balances poses challenges to banks over the medium to long term, rating agency Crisil said on Friday.

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This comes amid concerns in some quarters over the increased preference for capital market investments by households looking for higher yields, while others believe the shift is representative of the maturing profile of the system.

“Two key trends, a decline in household contribution to term deposits and a lower CASA ratio, indicate a structural shift in deposit composition. And these may pose challenges to deposit stability and impact funding costs over the medium to long term, particularly during periods of tight liquidity,” the rating agency said in a note