Rediscount loans surge to 110.61 B as of end July

The central bank said it has released 110.61 billion worth of funds to banks under its peso rediscount facility as of end-July, way more than the 127 million it released in the same period last year.

The Bangko Sentral ng Pilipinas (BSP) does not disclose which banks have availed of the rediscounting facility. These funds are borrowed for banks’ liquidity requirements and they use it for new loans to other borrowers. In effect, the rediscounting cycle helps sustain the bank’s funds for relending to its borrowers and, at times, even to service withdrawals.

As of end-July, 51.71 percent of rediscounting loans were for commercial credits and these are distributed as: Imports (29.89 percent), trading (21.74 percent) and exports (0.08 percent).

About 48.27 percent went to “other credits” such as capital asset expenditures (37.11 percent), services (6.58 percent), permanent working capital (4.53 percent), and housing (0.05 percent). The rest went to production credits, said the BSP. The endJuly rediscounting loan level was also higher than June’s 19.77 billion.

Last month, the BSP approved other alternatives for banks to comply with the Agri-Agra Reform Credit Act of 2009 (Republic Act 10000) including the investments in bonds issued by government banks for lending to the agricul-