Importance of CASA deposits:

The main function of a bank is accepting deposits of money for the purpose of lending
and investment. Banks are essentially Commercial Organisations and hence they work
for profits. The major portion of the profits of the Bank comes from Net interest Income
which is the difference between interest earned an advances granted to various
categories of borrowers under per segment, Agri. segment, SME & C & I segments and
interest paid on various deposits mobilised by them such as Savings Bank, Term
Deposits, Special term deposits, Recurring deposits etc. In order to maximize the net
interest income, which in turn will improve the profitability, Banks follow the following
strategies. Augment mobilization of CASA Deposits to bring down the cost of deposits
on the one hand, increase high yielding advances and reduce Non Performing Assets of
the bank, on the other, to increase the yield on advances. This essay deals with
importance of CASA deposits for the banks.
CASA Deposits constitute Current Accounts which have no cost and Savings Bank
Accounts which have low cost for the Bank. CASA deposits are preferred by the banks
for the reason that besides reduced cost, these are more stable. Increase in CASA
deposits brings down the average cost of deposits and thereby improves the
profitability. State Bank enjoys CASA deposits of 45.5% of its total deposits thanks to
the large network of branches in India including in rural and semi urban areas. Due to
the importance of CASA deposits, the Bank takes the following steps on an ongoing
basis.
a) CASA Deposits campaigns: All staff are alerted to survey and canvass opening C/A &
SB a/cs. Trading concerns, Schools, Colleges, Clubs, associations, charitable
organisations, trusts accounts etc. are canvassed during these campaign & brought to
banks books.
b) Deposit fortnights: During these fortnights special emphasis is given for opening
more Current and Savings Bank accounts.
c) Opening of basic Savings Bank A/cs: In order to give fillip to financial inclusion
savings Bank accounts are opened with liberalized KYC norms. This will result in
increase in the base of S.B a/cs of the Bank and improve CASA deposits. These have
potential to turn into large accounts in future. Special efforts are being made to contact
the relatives of the proprietors of firms, partners and directors of fairly large, accounts to
identify potential customers and bring them to the banks books.
d) Providing alternate channels of delivery: Banks provide various alternate channels of
delivery such as ATM, Internet Banking, Mobile Banking, Mobi Cash etc. for making
banking a more convenient and
pleasurable experience for the customers.
e) Provision of universal Banking services: The Bank in order to make the customer feel
happy and confine to our bank provides all banking services / products under one roof.
These include providing

locker facility, safe custody articles, cross selling of Insurance policies, credit cards,
Mutual funds, remittance facilities such as issue of DD, IOI instruments,
RTGS/NEFT/remittances, ECS, sale
of gold coins/POS machines, wealth management, financial counseling etc. Every staff
member is enabled to realize the importance of CASA deposits for the Bank so as to
involve him in mobilizing CASA deposits by rendering first class service to customers.
There is no gainsaying the fact that CASA deposits are very important for the Bank to
improve its profitability.