Deposits & Accounts
A bank deposit is an amount of money that a person or an organization puts into a bank account. This money belongs to the customer, but the bank uses it to give loans to others. In the banking world, this creates a 'Debtor-Creditor' relationship. When you deposit money, the bank becomes the debtor (the one who owes money) and you become the creditor (the one to whom money is owed). Deposits are the main source of funds for any bank.
Concepts (3)
Syndicated lending occurs when a group of lenders, known as a syndicate, works together to provide a large loan to a single borrower. This is common for huge corporate projects.
Syndicated lending occurs when a group of lenders, known as a syndicate, works together to provide a large loan to a single borrower. This is common for huge corporate projects. It allows banks to participate in large deals without taking the entire risk on their own balance sheets. Example: A group of 10 banks lending to a national highway project.
CASA stands for Current Account and Savings Account. The CASA ratio is the ratio of deposits in these two types of accounts to the total deposits of the bank.
CASA stands for Current Account and Savings Account. The CASA ratio is the ratio of deposits in these two types of accounts to the total deposits of the bank. A higher CASA ratio is good for a bank because these deposits are 'cheap' or low-cost funds. This allows the bank to earn a better profit margin when they lend that money to others.
Demand liabilities are funds that a bank must pay to the customer immediately upon request. The most common examples are Savings Account balances and Current Account balances.
Demand liabilities are funds that a bank must pay to the customer immediately upon request. The most common examples are Savings Account balances and Current Account balances. Since the bank does not know when the customer will ask for this money, they must keep a portion of it ready. For example, when you use your ATM card to withdraw cash, you are accessing your demand deposit.
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