MUMBAI: Barring a few smaller banks, none of the private sector lenders have grown their Casa books in the December quarter despite growth in deposits, which will negatively impact their margins, while their public sector peers have done so handsomely apart from leading the industry in both credit disbursals as well as deposit mobilisation for the fourth consecutive quarter.
The declining Casa, which is the cheapest source of funds for a bank, has very serious implications for a lender’s profitability as higher cost of funds eats into the net interest margin, which is the core cog of a bank’s profitability. Falling Casa ratios amidst rise in overall deposit mobilisation means these banks have been collecting term/fixed deposits and not the lowest-cost Casa liabilities.
While a bank pays a nominal 2.5-3% annual interest to a savings bank accountholder, a person with large balance in the current account earns nothing. But a fixed deposit fetches her at least 6% annually. Barring the notable exception of the industry leader SBI and the second largest private sector lender ICICI Bank, almost all banks have shared their business performance in the December quarter.
Among the large private sector banks, Kotak Mahindra Bank has seen the steepest fall in the low-cost Casa ratio, which plunged 101 bps on-year in the December quarter to 41.3, even though its deposit mobilisation grew 14.6% and credit disbursals jumped 16%, according to the data collated by Indus Equity Advisors. And the only exceptions to this falling Casa trend are the mid-sized Yes Bank, South Indian Bank and Tamilnadu Mercantile Bank.
While Yes Bank has registered a 30 bps growth in the Casa ratio at 34 despite a nearly muted deposit growth of 5.5% and loan growth of 5.2%, South Indian Bank saw the Casa book inching up by just 2 bps to 31.8% even as its deposits grew 12.2% and loans grew by 11.3% in the December quarter, and Tamilnadu Mercantile Bank declared a 59 bps growth in Casa ratio at 27.9 while its loans grew 16.3% and deposits rose 12.5%.
The third largest private sector lender Axis Bank also saw its Casa book falling by 60 bps to 39.1% even though its loans grew 14.1% and overall deposit mobilisation grew 15%. Indusind Bank, which has been facing asset quality and other issues has seen its new loan growth declining by 13.1% and deposits declining by 3.8% and the Casa ratio falling 30.3, down 43 bps from the year ago period in December 2025.
On the other hand the largest private sector player HDFC Bank has seen only a marginal 27 bps decline in the Casa ratio to 33.6, even as it saw its overall deposits growing by 11.5% and fresh loans by 11.9%. Dhanalaxmi Bank saw its Casa ratio falling by 74 bps to 28.1, even as its deposits jumped 18.4% and new loans grew 23.9%.
Bandhan Bank saw the Casa ratio falling by 70 bps to 27.3, and loans growing by 10% and deposits rising by 11.1%. Even the largest small finance bank AU Bank saw its Casa ratio falling by 505 bps to 28.9 while deposits soared 23.3% and loans grew 24%.RBL Bank said Casa book declined by 100 bps to 30.9% even though its deposit grew 12.2% and loans by 12.8%.
The privatisation bound IDBI Bank, which technically is already private sector bank, said its Casa book declined by 175 bsp to 44.1% while its deposits grew 9% and loans grew 15.5%.Karur Vysya Bank Casa book came down 43 bps to 27.2%, deposits jumped 15.6% and loans rose 17.1%, Catholic Syrian Bank saw the Casa ratio falling by 62 bps to 20.6 despite a healthy 21.1% jump in deposits and a healthier 28.7% rise in loans. As against these sets of falling numbers, while most state-run banks did not share their Casa numbers for the reporting five of them said their low-cost books rose.
Central Bank of India said its Casa book rose by 41 bps to 47.1%, Uco Bank’s grew by 30 bps to 38.4%, Indian Bank’s grew by 17 bps to 37.3% and Punjab& Sindh Bank said its Casa deposits grew 71 bps to 31%.Surprisingly, Bank of Maharashtra, which has been the leader in Casa collection, saw its low-cost deposits falling by a huge 80 bps to 49.6% which still is the highest in the industry.
The second largest state-owned lender Bank of Baroda said its domestic business increased 9.09% and liabilities rose 8.54%, Punjab National Bank reported a 10.15% rise in advances and 8.5% in deposits, Bank of India’s loans grew of 13.6% and deposits 16.6%.Bank of Maharashtra’s loans grew 19.6% deposits at 15.3%, Uco Bak’s (16.5%, 10.6%), Indian Bank (14.4%, 12.5%), Punjab & Sindh Bank (15.2%, 9.3%), Central Bank of India (19.6%, 13.2%), Bank of Baroda (14.6%, 10.2%), J&K Bank (17.3%, 10.6%), Union Bank (7.1%, 3.4%), respectively. According to a Crisil analysis, public sector banks have demonstrated stronger growth in the first half of fiscal 2026 compared with private sector banks with their share in incremental credit increasing to 61% from 55%.
This growth was driven by an expansion in rural credit and sustained demand from MSMEs, despite an increase in risk associated with US tariffs. Gross bank credit outstanding rose 7% to Rs 1,95,273 billion as of November 28, 2025, from Rs 1,82,440 billion in March 2025, driven by retail credit that accounted for 33% of the total.