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Two senior bankers discuss the prospects of banks getting deposits and the possible growth in CASA ratios in the wake of demonetization

Mayank Mehta

RBI data has showed that bank deposits increased 3.6% during April 2016 to August 2016 as against 2.9% in the corresponding period last year. Deposits for the fortnight ended 11 November increased to 11.7% yoy. This includes deposits collected by banks during the 2 days post-demonetization. Banks have received deposits worth Rs 5.1 trillion up to 18 November 2016.

Bank of Baroda’s domestic deposits have come down to Rs 397,981 crore as of Q2, 2016-17, registering a yoy decline of 2.9%. As far as composition of deposits as of August 2016, is concerned, savings deposits went up by 16.34%, current deposits up by 7.95% and recurring deposits up by 10.57%, but fixed deposits were down 6.63%.

Mayank Mehta, ED, Bank of Baroda, explains that the fall in total domestic deposits of the bank was on account of conscious decision to shed high cost bulk deposits. “The continued thrust on retail business was evident from reduction in bulk deposits (by 31.69% during Q2FY17 on yoy basis) thus reducing cost of deposits and improved margins. We continued to focus on increasing our CASA deposits, by cementing our relationships with all our customers, existing as well as prospective,” says he.

On the other hand, the total deposits of Karur Vysya Bank as on 30 September 2016 was Rs 52,002 crore. Out of this, CASA constituted 24.93% while the remaining 75.07% came from term and bulk deposits. While current deposits constituted 8.70% of total deposits, savings deposits were at 16.23%. K Venkataraman, MD & CEO of the bank, says year on year, growth in CASA was by 19%, with current deposits improving by 12%. Growth in savings was a more robust 23%.

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