Officials hopeful of CASA improvement across banks

Mumbai: The banking veterans are quite hopeful that CASA (Current Account and Saving Bank Account) will improve across the board for the banks in the country in days to come.

“I told banks I will not re-infuse capital. In the last few years, I have been saying to banks to improve their CASA (Current Account and Savings Account), go out & mobilise deposits,” said FM Nirmala Sitharaman at a recent press meet. Talking to Bizz Buzz, MV Hariharan, former treasury head, State Bank of India, says, “The budget for the FY 26-27 has priorities which are more pressing for the government, rather than recap of banks.

The presumption being that they're currently comfortable, ticking most of the boxes, NPAs, NIMs and RAROC. The expected consolidation in the sector is also a factor driving the government's POV.”

That said, expecting CASA to improve across the board is quite optimistic and actually a bit naive. With all the inflationary challenges in a very volatile geopolitical scenario, the trajectory of interest rates is quite unpredictable. Investment opportunities in the markets look more attractive than parking money in banks, he said.

As things stand, this statement is also a strong signal to banks to raise the required capital elsewhere.

This implies better risk management and thereby balance sheets. With the government also expecting robust credit growth, banks will be compelled to reengineer their products and pricing more competitively and with the expected agility. Shiva Kumar, former Managing Director at State Bank of Bikaner & Jaipur says, “PSU Banks are in best of health in decades generating good profit to plough back as capital.”

FM may not infuse fresh capital from her coffer. But Government may consider adding capital for a faster growth, if required, to the extent of dividends they receive from Banks.