Economics • Banking & FinanceEasy
What does the term 'CASA Ratio' signify for a commercial bank?
A. The proportion of total deposits coming from Current Account and Savings Account, representing low-cost funds.✓ Correct Answer
B. The ratio of credit advanced to agricultural sectors versus industrial sectors.
C. The share of capital adequacy maintained against risky assets.
D. The proportion of non-performing assets to total advances.
💡 Solution & Explanation
The CASA ratio measures the proportion of a bank's total deposits originating from current and savings accounts, which typically offer very low interest rates, thereby lowering the cost of funds. A high CASA ratio indicates strong profitability for commercial banks.
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