The current account deposits of Canara Bank saw a sharp reduction during the April–June quarter due to the withdrawal of funds by four to five central public sector undertaking (PSU) institutions, Managing Director and Chief Executive Officer K Satyanarayana Raju said during the post-earnings press conference on July 24.
Raju added that every year in the March quarter, key PSU institutions receive deposits in their accounts leading to a rise in current account balances. In the following quarter, withdrawals typically take place from these accounts resulting in a sharp drop in current account balance.
“These four to five PSU institutions receive Rs 20,000-25,000 crore in Q4 of every fiscal,” Raju said.
In the April–June quarter, the bank’s current account deposits declined by 30.57 percent quarter-on-quarter to Rs 54,045 crore, down from Rs 77,841 crore in Q4FY25, according to the investor presentation.
However, on a yearly basis, current account deposits grew by 9.85 percent. Despite this, stress on current account and savings account (CASA) deposits remained, with only a marginal year-on-year rise of 3.75 percent.
In recent quarters, Indian banks have been struggling with deposit mobilisation - especially on the CASA front - due to unattractive interest rates for depositors while other financial products offered better returns.
Additionally, pressure on CASA ratio has increased after the central bank began its rate-cutting cycle, prompting lenders to adjust rates on these deposits. So far this year, the RBI has cumulatively cut the repo rate by 100 basis points to support growth.
The bank’s total domestic deposits rose by 8.74 percent year-on-year to Rs 13.39 lakh crore in the April–June quarter, up from Rs 12.31 lakh crore in the same period last year.
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