Tides of 1.08.2015

1.  The Reserve Bank of India has said banks can carry out the business of factoring departmentally, without obtaining its prior approval, subject to conditions. When a bank undertakes factoring, an enterprise sells its accounts receivable (invoices) to the bank at a discount. Later, the bank recovers money from the buyer on the maturity date of the invoices. The RBI said banks may formulate a comprehensive factoring services policy with the approval of their Boards and offer services to their customers in accordance with this policy. Factoring services may be provided either with recourse or without recourse or on limited recourse basis. These services should be extended in respect of invoices, which represent genuine trade transactions, the RBI said.

2.  ICICI Bank, country’s largest private bank, posted a 12% increase in net profit for the June quarter at Rs. 2,976 crs, helped by higher net interest income and stable loan growth. The profit was limited by increase in provisions towards bad loans. Net interest income (the difference between interest earned on loans and interest paid on deposits) rose 14 per cent to Rs. 5,115 crs while other income or non-interest income increased 5 per cent to Rs. 2,990 crs. Provisions, including towards bad loans, rose 32% to Rs. 955 crs as compared to Rs. 726 crs a year ago. Fresh bad loans during the quarter amounted to Rs. 1,672 crs with Rs. 292 crs from restructured assets. Chanda Kochhar, MD and CEO, said the bank is seeing stability in its assets. Credit losses will be less than 1 per cent (going forward).

3.  ICICI Bank’s marginal improvement in asset-quality in the June quarter is a key positive for the bank; it had been witnessing higher additions to bad loans and increasing slippages from restructured assets in the past few quarters.The bank’s gross non-performing assets (GNPAs) fell to 3.68% of total loans, from 3.78% in the previous quarter.

4.  With continuous policy of front-loading development expenditure, the Centre’s fiscal deficit has exceeded half of the Budget target during the first three months (April-June) of the current fiscal. However, the good news is that tax collection has also seen good growth.Fiscal deficit is the difference between the government’s income and expenditure.Latest data from the Controller General of Accounts, the book keeper of the Government, showed that fiscal deficit touched nearly 52% of the Budget estimate which was Rs. 5.56 lakh crs. owever, this is lower than the deficit ratio (56%) during the corresponding period of the pervious fiscal.Finance Ministry officials are confident that fiscal deficit target, which is 3.9% of Gross Domestic Product, will not exceed.