Closing a five-crore CASA gap with three RMs and a ₹40,000 budget
A branch's deposit base is ₹62 crore, of which CASA is ₹19.8 crore. The district has set a CASA ratio target of 40% on the same deposit base, because a ₹9 crore bulk term deposit from a local mill matures in 45 days and treasury expects it to leave. The branch has three relationship managers and a monthly marketing budget of ₹40,000. Of its 1,900 Jan Dhan accounts, 62% have had no customer-induced credit or debit for six months. A nearby industrial estate employs 1,200 workers whose salaries are paid into accounts at a private bank; its HR head has agreed to a three-day on-site account-opening camp if the bank bears printing and logistics of about ₹27,000. Activating dormant accounts through SMS plus RM calls would cost about ₹8,000 and is expected to revive 30% of them, with an average balance of ₹15,000. New salary accounts are expected to carry an average balance of ₹38,000.
1. Quantify the CASA gap and test whether the two initiatives together close it, showing the arithmetic and the budget position.
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Required CASA = 40% × ₹62 crore = ₹24.8 crore. Current CASA = ₹19.8 crore, so the gap is ₹5.0 crore.
Salary-account camp: 1,200 workers × ₹38,000 average balance = ₹4.56 crore of CASA if the accounts are actually credited at the branch. Dormant activation: 62% of 1,900 = 1,178 inactive accounts; 30% revived = 353 accounts × ₹15,000 = ₹0.53 crore. Combined: ₹5.09 crore, which clears the ₹5.0 crore gap by a small margin.
Budget: ₹27,000 for the camp plus ₹8,000 for the activation drive = ₹35,000, inside the ₹40,000 ceiling, leaving ₹5,000 as contingency for re-calling unreachable customers.
Two cautions to flag in the note: the ₹5.09 crore depends on balances settling, not on accounts being opened, and a 0.09 crore cushion is thin, so a 10% shortfall in salary balances alone reopens the gap.
2. Treasury suggests simply letting the ₹9 crore bulk deposit go, since the CASA ratio would then look far better. Evaluate that reasoning and recommend a position.
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If the ₹9 crore leaves, deposits fall to ₹53 crore and the 40% target becomes ₹21.2 crore of CASA, a gap of only ₹1.4 crore instead of ₹5.0 crore. The ratio improves because the denominator shrank. That is arithmetic, not performance, and it should be named as such.
The real question is liquidity and spread, not the ratio. If the ₹9 crore can be deployed in advances at a rate comfortably above 7.25% plus operating cost, renewing is earnings-accretive even though it dilutes the ratio. If credit demand in the area is weak and the money would sit in call or SLR-type assets, renewal at 7.25% is value-destroying.
Recommended position: renew only part of it, negotiate toward 7.00%, and split the tenure (say 6 months) to buy time while the CASA plan runs. Never present the ratio improvement from an outflow as a marketing achievement - the district office will see the deposit base fall.
3. Forty-five days later, the branch reports 1,180 new accounts and a CASA ratio of 36%. What has probably gone wrong, and which measures should the marketing officer have tracked instead?
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1,180 accounts against a 1,200 plan looks like 98% success, but accounts are the output, not the balance. If the ratio is only 36%, CASA is roughly ₹22.3 crore, an increase of about ₹2.5 crore against the ₹5.09 crore assumed - consistent with two failures: salary credits are landing in the private bank (the accounts were opened but not made primary) and the revived dormant accounts are back near zero.
The correct dashboard is balance-based and behavioural: average balance per new salary account at 30 and 60 days, share of accounts receiving a salary credit each month, activation rate and 60-day survival rate for revived accounts, and cost per ₹1 lakh of CASA raised (₹35,000 for ₹5.09 crore is very cheap; if cost per lakh triples, the channel mix is wrong). The officer should also track new-to-bank customers, since internal transfers inflate account counts without adding deposits.