The UPA- led government has asked public sector banks (PSBs) to lay more emphasis on low cost CASA (current account, savings account) deposits. It will help in putting a check on the cost of funds and maintain lower interest rates.

A banker said, "The government wants banks to increase their Casa deposits. These low-cost deposits will help us to contain costs, which mean that a softer interest rate regime can be maintained."

The centre has asked the state-run banks for their CASA targets. According to bankers CASA deposits of most of the public sector banks were slated for an increase of 17-20 percent for the current financial year.

With a likely increase in the interest rates, CASA deposits have come into prominence for the first time. Otherwise, the main thrust used to be on deposit growth.

Over last three years, the CASA deposits for public sector banks have dropped from 39.95 percent at the end of March 2006 to 32.66 percent by the end of March 2009.

Delhi based, Punjab and Sind Bank aims a 20 per cent increase in Casa in 2009-10. It would enable the bank to have a 30 per cent share of low-cost deposits in its total deposits. The bank's Casa share was 27.7 per cent at the end of March 2009.

Allahabad bank and corporation bank have projected a growth of 17-18% in CASA deposits this fiscal. Allahabad bank is looking to maintain the previous low-cost deposit share of 34 percent.

Even SBI, India's largest PSB has initiated an appropriate procedure to increase its CASA deposits. The bank's share of CASA fell to 38.45 percent at the end of June from 39.26 percent in March due to decrease in current account balances.

An increase in the CASA deposits would also help the banks to improvise on their net interest margins (NIMs), which suffered decline in the first quarter.