Public sector lender Indian Bank has a plan to step up its current and savings account deposits (CASA) following a decline in the quarter ended June 30, 2025 (Q1FY26). Data disclosed by the bank shows that its CASA according to cent of domestic deposits was at 38.97 per cent in Q1FY26 compared with 40.17 per cent in Q4FY25 and 40.56 per cent in Q1FY25.

“I will not say CASA will substantially grow but if we can maintain it at around 39 per cent, I think that will be all right, and we have taken certain measures towards this,” Binod Kumar, MD and CEO of Indian Bank, told The Telegraph.

Kumar said the bank has launched specialised products for women, senior citizens and professionals and is also expanding its branch network.

“We are focusing on salary accounts in a big way. We have signed a memorandum of understanding with government departments and PSUs, and we have been able to open 90,000 accounts this quarter,” he said.

Deposit mobilisation has been a challenge for banks amid falling interest rates, with the RBI lowering the repo rate and banks having to reprice their deposits. The rate of growth of deposits has declined from 13.5 per cent in March 2024 to 10.3 per cent in March 2025 and further to 10.1 per cent for the fortnight ended June 27, 2025. The government releasing funds for state-sponsored schemes at the last moment from its accounts and depositors looking at alternative options such as mutual funds are also putting pressure on CASA deposits.

Indian Bank has seen a compression of its domestic net interest margin (NIM) from 3.53 per cent in Q1FY25 to 3.48 per cent in Q4FY25 and further to 3.35 per cent in Q1FY26.

“My expectation is that NIM will go down in Q2. But our aim will be to contain how much it goes down. Many banks have already seen their NIM loss in the range of 40-47 basis points. We have been able to contain at 13-14 basis points. We are confident that we will be able to maintain our original NIM guidance of 3.15-3.30 per cent for FY26,” he said.