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A decline in current and savings account ratios (CASA) has added to the stress for large public sector banks such as State Bank of India (SBI) and Bank of Baroda (BoB). These banks are working to boost their CASA after the share of low-cost deposits has declined. SBI is focusing on opening more current accounts. However, SBI Chairman Dinesh Khara said the bank is not revising its savings deposit rates to improve CASA.
Emphasis on increasing the current account
SBI is looking to grow the current account and is looking at an 8% increase in the current account over a year ago. Khara said six months ago SB I Launched transaction banking centers across India which led to increase in current accounts. Like some of its peers, SBI also saw a decline in its gross CASA ratio in the September quarter. SBI’s CASA stood at 41.8% at the end of September, as against 44.63% a year ago.
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SBI reported 8% year-on-year profit growth during the September quarter at Rs. 14,330 crores. However, quarterly profit and operating profit fell by 15% and 23% respectively. This decline in profit was due to reasons such as increased provision for wage revisions. SBI chairman Khara said the bank is comfortable giving unsecured loans as it is mostly aimed at salaried employees. SBI expects 15-16% growth in unsecured loans.
CASA of Bank of Baroda
Bank of Baroda is looking to increase its CASA from 39.6% to 41%. We are offering many incentives at CASA. Bank of Baroda’s profit rose 28.4% year-on-year to ₹4,253 crore. BoB posted a better-than-expected profit despite a 27 basis point drop in net interest margin to 3.07%.
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Decrease in deposit amount
Recently, a survey report released by industry body FICCI and Indian Banks Association (IBA) also stated that CASA deposits have declined. Deposits in current and savings accounts are of low value among the money that banks collect. More deposits in these accounts mean better margins for banks.