BSP notes uptick in peso rediscount facility availment

Loans availed by local banks under the peso rediscount facility reached P5.81 billion in the first two months of the year, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

This is an improvement from the level of rediscount loan availments seen in the same period in 2017, the BSP said.

According to BSP data, 28.1 percent of the loans disbursed under the peso rediscount facility during the period went to commercial credits.

Bulk, or 71.86 percent went to other credits consisting of capital asset expenditures (67.78 percent), permanent working capital (3.94 percent), housing (0.09 percent) and other services (0.05 percent).

The remaining 0.04 percent was used for production credits.

The BSP said there was no availment under the Exporters Dollar and Rediscount Facility (EDYRF) during the two-month period.

Rediscounting is a privilege of a qualified bank to obtain loans or advances from the BSP using the eligible papers of its borrowers as collaterals. It is a standing credit facility provided by the central bank to help banks liquefy their position by refinancing the loans they extend to their clients.

Over the past few years, the use of the central bank facility has been declining steadily as there is enough cash circulating in the economy.

Last year, borrowings from the facility reached P1.59 billion, way below the P10.676 billion in total rediscount loans distributed in 2016.

For March this year, the BSP said the rates of rediscount loans maturing in 90 days is set at 3.5625 percent, while those with tenors from 91 to 180 days carry a rate of 3.625 percent.

Last June, the BSP’s Monetary Board adopted a unified rediscounting window for all types of banks as it decided to terminate the sunset provision for small banks.

The central bank approved the removal of the sunset period of five years for thrift banks, and 10 years for rural and cooperative banks in accessing the BSP’s peso rediscount facilities.

Based on statistical data, the regulator said thrift, rural, and cooperative banks are no longer dependent on BSP funds, thereby, warranting the shortening of the sunset provision.