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    Question

    In Banking Industry, what is true about CASA.

    i.It stands for Current Account and Saving Account

    ii.CASA represents the low-cost funds available to the bank

    iii.Banks pay zero interest on the balances on Current Accounts

    A Only i Correct Answer Incorrect Answer
    B Only i & ii Correct Answer Incorrect Answer
    C Only ii & iii Correct Answer Incorrect Answer
    D Only iii Correct Answer Incorrect Answer
    E All the above Correct Answer Incorrect Answer

    Solution

    CASA ratio of a bank is the ratio of deposits in Current Account (CA) and Saving Accounts (SA) to total deposits. A higher CASA ratio indicates a lower cost of funds, because banks do not usually give any interests on current account deposits and the interest on saving accounts is usually very low 3-4%. Only few banks (e.g. YES Bank and Kotak Mahindra Bank) pay higher interest of around 6% on Saving Account balance.

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