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      Question

      In Banking Industry, what is true about CASA.

      i.It stands for Current Account and Saving Account ii.CASA represents the low-cost funds available to the bank iii.Banks pay zero interest on the balances on Current Accounts
      A Only i Correct Answer Incorrect Answer
      B Only i & ii Correct Answer Incorrect Answer
      C Only ii & iii Correct Answer Incorrect Answer
      D Only iii Correct Answer Incorrect Answer
      E All the above Correct Answer Incorrect Answer

      Solution

      CASA ratio of a bank is the ratio of deposits in Current Account (CA) and Saving Accounts (SA) to total deposits. A higher CASA ratio indicates a lower cost of funds, because banks do not usually give any interests on current account deposits and the interest on saving accounts is usually very low 3-4%. Only few banks (e.g. YES Bank and Kotak Mahindra Bank) pay higher interest of around 6% on Saving Account balance.

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