Why Branches Push CASACASA
A deposit is not just a deposit — CASA is the cheapest money a bank can raise, and every rupee of it widens the margin.
Why you care
A deposit is not just a deposit. Current accounts pay 0%, savings ~3%, FDs 7%+ — so ₹10 lakh in a current account and ₹10 lakh in an FD are worth wildly different amounts to the bank. CASA is the most profitable raw material the bank has, and your branch is the only place that makes it. That's why your CASA target isn't arbitrary.
Run the numbers
Two branches fund the same ₹100 cr at the same 9% loan yield. The CASA-heavy one runs a 5.3% spread; the FD-heavy one only 3.4% (illustrative) — same loans, more profit, purely from where the money came from. That's why current accounts are called "gold."
Where this goes
Your branch hustle rolls up into the bank's CASA ratio: open accounts → cost of funds falls → NIM widens → the bank is judged more profitable. Your CASA target is the bottom of a chain that ends in the share price.
Why you care
Deposits come in two flavours — CASA (Current Account and Savings Account: cheap, withdrawable any time) and term deposits (FDs/RDs: locked for a tenure, and far more expensive for the bank). Branches chase CASA relentlessly because every rupee of it lowers the bank's cost of funds and widens its margin.
A deposit is not just a deposit. A current account pays the customer 0% interest; a savings account only ~3%; a term deposit costs the bank 7% or more. So a ₹10 lakh current-account balance and a ₹10 lakh FD are worth wildly different amounts to the bank. That explains a lot of branch behaviour that can feel puzzling: why the bank is delighted when a business parks its working capital in a current account, and why savings interest is so stingy. It also explains why FDs are quietly the least profitable money the bank holds, even though customers love them.
If you work in a branch, CASA targets are probably what your performance is measured on. The reason isn't arbitrary: CASA is the single most profitable raw material the bank has, and your branch is the only place that can manufacture it.
Run the numbers
First, what the bank pays on ₹10 lakh, by deposit type (illustrative rates):
| Deposit type | Interest to customer | Annual cost to bank on ₹10 L |
|---|---|---|
| Current account | 0% | ₹0 |
| Savings account | ~3% | ₹30,000 |
| Term deposit (1–3 yr) | ~7% | ₹70,000 |
Now roll that mix up to branch scale. Two branches, each funding ₹100 crore of loans:
| Branch A (CASA-heavy) | Branch B (FD-heavy) | |
|---|---|---|
| CASA (0–3%) | ₹60 cr | ₹25 cr |
| Term deposits (7%) | ₹40 cr | ₹75 cr |
| Interest paid | ~₹3.7 cr | ~₹5.6 cr |
| Cost of funds | ~3.7% | ~5.6% |
Both lend at the same 9% yield. Branch A's spread is 5.3%; Branch B's is only 3.4%. Same loans, same effort on the lending side — but Branch A is far more profitable purely because of where its money came from. A shopkeeper who keeps ₹15 lakh of float in a current account is, in margin terms, worth more than a ₹15 lakh FD the bank must pay 7% to keep.
Where this goes
The branch-level hustle for current accounts shows up at the bank level as the CASA ratio — the headline number that tells analysts how cheaply the bank is funded. So the chain is complete: you open current accounts → cost of funds falls → NIM widens → the CASA ratio rises → the bank is judged more profitable. Your CASA target is the bottom of a chain that ends in the bank's share price.