In June 2024, the Indian banking system was facing a decline in the current account and savings account (CASA) ratio and a significant gap in credit-deposit growth. CASA deposits had an important influence on profitability for banks in India. Union Bank of India (Union Bank), the country’s fifth-largest public-sector bank, held shares of 5.5 per cent in net advances and 6.0 per cent in total deposits, respectively. The bank had seen a substantial drop in its CASA ratio, from 36.54 per cent in financial year (FY) 2022 to 33.58 per cent in FY 2024—significantly below the average for scheduled commercial banks, which stood at approximately 40.00 per cent. This decline raised the bank’s cost of funds from 4.3 per cent in FY 2023 to 5.1 per cent in FY 2024. As the bank’s managing director and chief executive officer led the bank’s response, she needed to explore potential options to address the issue of the declining CASA ratio.
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