State owned banks have seen a drop in low cost — current and savings account (CASA) deposits in the current fiscal. This means that banks have to bear a larger cost by paying heavier interest rate on the deposits that they primarily hold. The finance ministry has been repeatedly stressing the need for banks to focus on CASA deposits.
The State Bank of India’s share of CASA deposits of its liability dropped from 43.1 per cent in March 2008 to 39.7 per cent. Punjab National Bank also saw a dip from 43 per cent to 39 per cent in the same period.
A senior official at a public sector bank said that a surge in high cost deposit is always a matter of concern. “It is more so now as the banking industry is faced with a tough challenge in the wake of the collapse of the global financial sector,” he said, adding that it may even eat into the profit margins of the banks.
Smaller banks like Punjab and Sind Bank, Corporation Bank, Vijaya Bank and Dena Bank are among the worst hit. P&S Bank’s CASA deposit fell to 31.35 per cent of the total deposit from 36.34 per cent in March 2008. Corporation Bank too saw CASA deposits declining to a level of 25.44 per cent in September from 35 per cent in March 2008.
The bigger banks barring a few have however managed to maintain their level of low cost deposits. “There has been a very meager dip from what it was in March,” the official said.