In banking, CASA stands for:
- A.Current Account and Savings Account
- B.Capital Asset and Security Account
- C.Cash and Savings Allocation
- D.Credit Account and Settlement Agreement
Correct answer
Explanation
The correct answer is A, Current Account and Savings Account. CASA is the combined balance a bank holds in the current accounts and the savings accounts of its customers. These are the cheapest deposits a bank can have, because a current account pays no interest at all and a savings account pays very little, unlike a fixed deposit. The share of such deposits in the total deposits of a bank is called the CASA ratio, and a high ratio means the bank is funding its lending cheaply, which raises its net interest margin.
Options B, C and D are invented expansions built from banking sounding words. They are placed there because a candidate who has only heard the term and never read its full form will find all four equally plausible. Remember the ratio along with the full form, since papers often ask what a high CASA ratio indicates rather than what the letters stand for.
Read the full article: Banking Terms and Abbreviations: Full Forms and Meanings
Practice Questions
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- D.Real Time Gross Scheme
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- C.I, II and III
- D.I and III
Show answer
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- B.Moral Suasion
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- A.9
- B.11
- C.13
- D.16
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