Increase in Low Cost Bank Deposit (CASA) During Covid 19 Crisis: Possible Reasons & Impact on Profitability - A Comparative Analysis on Select Commercial Banks in India

Since 2020-2021, high uncertainty about the Covid pandemic and future economic prospects strengthened motives for precautionary saving, discouraging investment and purchases of durable goods. Current account and savings account deposits grew at a faster pace than term deposits, possibly reflecting the propensity of savers to hold more liquid assets in the highly uncertain pandemic situation since it enabled to withdraw demand deposits as per convenience without any constraints. Therefore, higher the CASA ratio enhanced the net interest margin, which signified better operational efficiency of the bank. This contributed to increased profitability. In this scenario, the present study attempted to make a Comparative Analysis of the low-cost deposits i.e. Current account and Savings account of the top five leading commercial banks in India, namely: HDFC Bank, State Bank of India, ICICI Bank, Kotak Mahindra Bank & Axis Bank and how CASA deposits impacted on their profitability during the Covid crisis period 2020-2021.The study was based on secondary data. Comparative Statement Analysis, Pearson’s correlation, and Bar graph were used. The findings concluded that there had been significant increase in CASA deposits, decrease in interest expenditure and positively correlated with the profitability of the banks during the covid crisis period of 2020-21.