With the revival of economic activity and a dip in term deposit rates, leading Indian banks have seen a rise of Casa (current account saving account) deposits in their portfolios.

The latest data from banks indicates that public sector banks have registered an increase of around 20 per cent in low-cost deposits during the current fiscal (2009-10). In the latter half of 2008-09 because of high term deposit rates the share of Casa deposits fell. With deposit rates falling to 6.25-7.5 per cent from 8.75-10.5 per cent, individuals are looking for other investment opportunities instead of parking funds in fixed deposits. banks do not pay any interest on current account and pay 3.5 percent per annum on savings accounts.

The UPA led government had also directed public sector banks to focus on CASA deposits. Recently, the apex bank had also expressed concerns over falling level of Casa in the last few years as banks had increased the FD rates.

ICICI bank, country's largest private sector bank, was able to increase its share of Casa deposits by 9000 crore during the second quarter. The bank saw an increase in the share of Casa in total deposits. this was mainly due to low deposit rates that decreased the deposit base of the bank.

Higher minimum balance required to maintain with the saving accounts shifted the focus to Casa, but this was not the only reason. With larger number of companies going for initial public offers (IPOs) and placement to institutional investors (QIP), funds were passed to the banks only for few days.

Public sector banks such as Bank of India, Punjab National Bank and Bank of Baroda have witnessed 8-10 per cent Casa growth till September over March. Union Bank's Casa growth in the first six months was one of the highest in the industry at 17.8 per cent with Casa accounting for 71 per cent of the incremental deposits since March. State Bank of India's (SBI's), country's largest lender, saw an increase of 126 basis points in the Casa share over same period a year ago.