Definition
Net Stable Retail Deposits
Stable retail deposits are sticky, granular deposits from individual customers that regulators treat as a reliable funding source under liquidity rules.
In the LCR and NSFR frameworks, retail deposits from individuals are assigned low outflow or high stability factors because they are less likely to flee in a crisis than wholesale or bulk deposits. A large stable retail base therefore eases a bank's liquidity requirements.
This regulatory preference reinforces the strategic value of a strong retail CASA and term-deposit franchise. Banks dependent on bulk and corporate deposits must hold more high-quality liquid assets, raising costs, which is why deposit granularity is prized in Indian banking.
Related terms
- CASA (Current and Savings Account)CASA refers to the combined balances in current and savings accounts, which are a bank's cheapest source of funds.
- Liquidity Coverage Ratio (LCR)The Liquidity Coverage Ratio requires a bank to hold enough high-quality liquid assets to cover its net cash outflows over a 30-day stress scenario.
- Net Stable Funding Ratio (NSFR)The Net Stable Funding Ratio requires a bank to fund its assets with sufficiently stable sources of funding over a one-year horizon.
- Deposits (Banking)Deposits are the funds customers place with a bank in current, savings and term accounts, forming the bank's primary and cheapest source of funding.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.