Bank CASA ratio falls to two-year low of 37.9% in December quarter: RBI Data
April 03, 2026
Low-cost bank deposits have fallen to a two-year low. This trend increases borrowing costs for banks. Savers are moving money to higher-return options like stocks and gold. Bankers anticipate an improvement as global uncertainty grows. This shift impacts bank profits and forces reliance on costlier funding sources.
Synopsis
Low-cost bank deposits have fallen to a two-year low. This trend increases borrowing costs for banks. Savers are moving money to higher-return options like stocks and gold. Bankers anticipate an improvement as global uncertainty grows. This shift impacts bank profits and forces reliance on costlier funding sources.
ET Intelligence Group: The share of low-cost current and savings accounts (CASA) deposits in the total deposits of the banking system hit a two-year low of 37.9% in the December 2025 quarter compared with 40.1% in the December 2023 quarter, according to the data from Reserve Bank of India (RBI).
The decline was led by savings accounts where the share dropped 210 bps to 28.9%, as depositors increasingly shifted funds to higher-yielding alternatives such as equities, mutual funds and gold. The CASA share was also down from the year-ago level of 38.3%. Falling CASA ratio reflects the broader slowdown in deposit mobilisation.
Also Read: Banks feel the pinch as CASA pool shrinks
Overall bank deposits grew 10% year-on-year to '239.8 lakh crore at the end of December, marginally slower than the 11% growth recorded in the year-ago quarter. Bankers expect the CASA ratio to improve in the current financial year, as heightened geopolitical uncertainty and volatile equity markets prompt savers to park more funds in bank deposits.
Savings account balances rose 8% year-on-year to '69.4 lakh crore in the December 2025 quarter, rising from 5% growth a year earlier.
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Current account deposits grew 10% to '21.4 lakh crore compared with 9% growth in the December 2024 quarter. The sustained erosion in CASA is negative for banks, as it pushes up their overall cost of funds. With the share of low-cost funds declining, lenders are increasingly compelled to raise money through higher-cost term deposits, short-term instruments such as certificates of deposit (CDs), and bulk borrowings to support credit growth. CD issuances by banks reached a record high of '15.5 lakh crore in FY26, up 17% YoY as lenders turned to market borrowings to fund credit growth.
CASA deposits are generally more stable and less rate-sensitive than bulk liabilities, providing banks with greater flexibility during periods of credit expansion or liquidity stress. Higher funding costs also have direct implications for banks' profitability as it compresses their net interest margins (NIMs).
Also Read: Update from five south-based banks: All report higher credit growth than deposit growth
With deposit growth lagging credit expansion, banks' credit-deposit (CD) ratio has inched up. The ratio rose to an all-time high of 83.0%, from 82.4% in the previous fortnight, driven by seasonal tax-related deposit outflows even as credit growth remained modest.
Total bank credit reached '207.7 lakh crore as of 15 March 2026, registering 13.5% YoY growth, higher than 11.1% in the corresponding period last year. In comparison, aggregate bank deposits reached '250.1 lakh crore, rising 10.8%, up from 10.2% growth a year earlier.
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Low-cost bank deposits have fallen to a two-year low. This trend increases borrowing costs for banks. Savers are moving money to higher-return options like stocks and gold. Bankers anticipate an improvement as global uncertainty grows. This shift impacts bank profits and forces reliance on costlier funding sources.
ET Intelligence Group: The share of low-cost current and savings accounts (CASA) deposits in the total deposits of the banking system hit a two-year low of 37.9% in the December 2025 quarter compared with 40.1% in the December 2023 quarter, according to the data from Reserve Bank of India (RBI).
The decline was led by savings accounts where the share dropped 210 bps to 28.9%, as depositors increasingly shifted funds to higher-yielding alternatives such as equities, mutual funds and gold. The CASA share was also down from the year-ago level of 38.3%. Falling CASA ratio reflects the broader slowdown in deposit mobilisation.
Also Read: Banks feel the pinch as CASA pool shrinks
Overall bank deposits grew 10% year-on-year to '239.8 lakh crore at the end of December, marginally slower than the 11% growth recorded in the year-ago quarter. Bankers expect the CASA ratio to improve in the current financial year, as heightened geopolitical uncertainty and volatile equity markets prompt savers to park more funds in bank deposits.
Savings account balances rose 8% year-on-year to '69.4 lakh crore in the December 2025 quarter, rising from 5% growth a year earlier.
Live Events
Current account deposits grew 10% to '21.4 lakh crore compared with 9% growth in the December 2024 quarter. The sustained erosion in CASA is negative for banks, as it pushes up their overall cost of funds. With the share of low-cost funds declining, lenders are increasingly compelled to raise money through higher-cost term deposits, short-term instruments such as certificates of deposit (CDs), and bulk borrowings to support credit growth. CD issuances by banks reached a record high of '15.5 lakh crore in FY26, up 17% YoY as lenders turned to market borrowings to fund credit growth.
CASA deposits are generally more stable and less rate-sensitive than bulk liabilities, providing banks with greater flexibility during periods of credit expansion or liquidity stress. Higher funding costs also have direct implications for banks' profitability as it compresses their net interest margins (NIMs).
Also Read: Update from five south-based banks: All report higher credit growth than deposit growth
With deposit growth lagging credit expansion, banks' credit-deposit (CD) ratio has inched up. The ratio rose to an all-time high of 83.0%, from 82.4% in the previous fortnight, driven by seasonal tax-related deposit outflows even as credit growth remained modest.
Total bank credit reached '207.7 lakh crore as of 15 March 2026, registering 13.5% YoY growth, higher than 11.1% in the corresponding period last year. In comparison, aggregate bank deposits reached '250.1 lakh crore, rising 10.8%, up from 10.2% growth a year earlier.
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