Higher interest rate puts pressure on CASA deposits, shows survey

Higher interest rates have resulted in a reduction in Current Account Savings Account (CASA) deposits as most of the savers are shifting towards term deposits, according to a report.
CASA is low-cost deposits mobilised by banks, and higher amount of low-cost deposits mean better margins for banks.
A survey by Ficci and Indian Banks’ Association (IBA) released on Thursday showed that long term credit demand has seen continued growth in sectors like infrastructure, textiles, and chemicals.
Food processing and metals iron & steel have also witnessed accelerated long-term loan disbursements in the past six months.
Infrastructure is witnessing an increase in credit flow, with 67 per cent of the respondents indicating an increase in long term loans as against 57 per cent in the previous round, according to the 17th round of the Ficci-IBA Survey.
The survey said that the outlook on expectations for the growth of non-food industry credit over the next six months is optimistic, with 42 per