CASA ratio of a bank is the ratio of deposits in current, and saving accounts to total deposits.
A higher CASA ratio indicates a lower cost of funds, because banks do not usually give any interests on current account deposits and the interest on saving accounts is usually very low 3–4%.
[1] If a large part of a bank's deposits comes from these funds, it means that the bank is getting those funds at a relative lower cost.
It is generally understood that a higher CASA ratio leads to higher net interest margin.
In India, it is used as one of the metrics to assess the profitability of a bank.