Casa ratio may fall further as govt enhances cash management: SBI chairman | Banking
Indian banks’ share of low-cost deposits—current and savings account (Casa) deposits—which is already on a downhill path, could go down further, courtesy of efficient cash management by the government as well as the corporate sector, State Bank of India’s (SBI) chairman CS Setty said.
“I will just look at our numbers again, which is a proxy for the banking system. The pre-COVID level Casa ratios were 40 per cent, which went up to 45 per cent post-COVID. Obviously, it is going back to 40 per cent. It may further go down if the efficient cash management, just-in-time cash management of the Government of India comes into play,” Setty said at an event organised by the Bengal Chamber of Commerce and Industry.
“Corporates have adopted efficient cash management now, and the government has also moved towards efficient cash management. This means that the float funds will not be available,” he said.
SBI’s share of Casa (domestic operations) in total deposits fell to 40.7 per cent at the end of June compared to 42.88 per cent a year ago. Most large banks have seen their Casa ratios fall in the last year or so, as customers are moving funds to fixed deposits, which are offering attractive rates.
However, SBI’s chairman said the country’s largest bank would be able to hold on to the current share of low-cost deposits. He said SBI would tap small businesses to keep their funds with the bank by providing superior services and innovative products like cash pick-up.
He also said it is not that deposits are not growing. “If you see in absolute numbers, deposits have grown by 58 per cent in five years. And credit has grown by 56 per cent.”
Referring to stress in retail loans, Setty said, “…there is some issue with small-value loans (Rs 50,000-1,00,000). But I think it has not reached the proportion where we need to worry about it.”
He said the recent regulatory norms, which reduced the frequency of reporting credit information of borrowers to credit information companies (CICs) to every 15 days from the previous monthly intervals, will help improve retail asset quality.
“Now the RBI has made it mandatory to refresh data within 15 days. This means that database lending will become much more robust… and would definitely help in terms of moderating any slippages,” he said.
He said there is healthy demand for corporate credit, which was also reflected in Q1 growth numbers.
“The good news is that on the corporate side, there is significant demand for corporate credit. And last quarter, we had almost 15-16 per cent corporate credit growth. But in the overall balance sheet or asset mix, the shift from corporate to retail has happened,” he said.
He also said that brownfield expansion is being undertaken by the corporate sector using their own cash, as they have stronger balance sheets now.
“Now, brownfield expansion is being undertaken using their own cash flows because the balance sheet is stronger. So since they are using their own cash, it’s not getting reflected in corporate credit,” he added.
First Published: Sep 18 2024 | 6:59 PM IST
