What it is
Deposits are the fuel of a bank. People and businesses put money in; the bank pays them interest and lends the money out at a higher rate.
There are kinds: current accounts (no interest, withdraw any time), savings accounts (low interest), call deposits, and fixed deposits (higher interest, locked for a term).
The mix matters. Cheap current and savings deposits (called CASA) lower the bank's cost of funds. Lots of fixed deposits raise it.
How it is calculated
Sum of all customer deposit balances by type: current + savings + call + fixed + margin and other deposits.
Worked on Nabil Bank Limited, FY 2082/83 Q4
NABIL held Rs 59,255.94 crore in customer deposits at the end of FY 2082/83 Q4, against loans to customers of Rs 46,031.78 crore, a credit-to-deposit ratio of 80.18%.
What good looks like
Steady growth and a high share of cheap savings and current deposits. Deposit growth that lags loan growth pushes the credit-to-deposit ratio toward NRB's ceiling.
Watch out
- Fixed deposits are more expensive for the bank than savings; the notes break down the mix.
- A deposit rate war raises the whole system's cost of funds and squeezes margins.
- Institutional deposits (from companies, funds) are large but can leave quickly.
In Nepal
NRB caps lending at 90% of deposits through the credit-to-deposit ratio (set in the FY 2078/79 monetary policy). The Nepal Bankers' Association has at times coordinated deposit rate ceilings, which affect the cost of funds across the sector.
Questions
Because it is the customers' money. The bank must give it back, so it owes it.
Deposits are protected first by the bank's capital and by NRB oversight, and small deposits by the deposit guarantee scheme. Profit falling does not by itself put deposits at risk.