You are correct, but what you’re referring to is CASA, or current account and savings account deposits.
If you dive deeper into the issue of deposit wars, it’s not about CASA; it’s actually a war over term deposits or longer-term deposits. The so-called ‘FD’ (fixed deposit) isn’t as popular these days. Many financial influencers are actively discouraging it, and as a result, funds are flowing into alternative investments like equities.
Currently, term deposits are being replaced by CASA in the system. While CASA is a cheaper source of funds for banks, term deposits give banks the confidence to underwrite longer-term loans, such as home loans, commercial and industrial loans, and other large-scale lending. Banks can’t rely on CASA for such loans due to an entirely different issue: Asset-Liability Mismatch.
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