Indonesian Banks Race for CASA Amid Rising Interest Rates

The rise of Bank Indonesia’s benchmark interest rate since last year will drive an increase in the banking cost of funds. In order to minimize margin depreciation, banks are endeavoring to increase their current account savings accounts.

Emanuel Berkah Caesario

9 Jun 2023 - 03.23
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Indonesian Banks Race for CASA Amid Rising Interest Rates

Illustration - An officer arranges a pile of money./Bisnis-Rahman

Bisnis, JAKARTA — Banks are adopting diverse tactics to bolster their current account savings accounts (CASA) and minimize their cost of funds, particularly in light of increased interest rates.

CASA refers to savings or current accounts that are favored by banks due to their low-interest rates. However, this type of account poses challenges for banks, as customers can withdraw their savings at any time, unlike time deposits that have fixed terms. Despite this, many customers view CASAs as long-term savings instruments due to their flexibility in accessing funds.

The surge in Bank Indonesia's benchmark interest rates over the past year has compelled banks to raise deposit interest rates, especially for time deposits. This, in turn, may impact banks' profit margins.

Consequently, banks are implementing various strategies to promote CASAs over time deposits. PT Bank Syariah Indonesia Tbk. (BRIS), for example, has managed to attract ministries and institutions to open CASAs this year.

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Editor: Yusuf Waluyo Jati
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Indonesian Banks Race for CASA Amid Rising Interest Rates

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