Peso rediscount loans surge to P57 B

Rediscount loans extended to local banks to finance the expansion needs of businesses and households hit a record P56.82 billion from January to November amid the series of interest rate hikes by the Bangko Sentral ng Pilipinas (BSP) to check rising inflation.

The amount was more than 50 times the P1.14 billion extended from January to November last year.

Out of the total amount disbursed under the peso rediscount facility in the first 11 months, the central bank said the bulk or 79.06 percent went to other credits while 20.92 percent went to commercial credits.

Majority of the loans of other credits includes capital asset expenditures with 53.55 percent, other services with 17 percent, permanent working capital with 8.5 percent, and housing 0.01 percent.

The BSP said there was no availment under the exporters dollar and rediscount facility (EDYRF) from January to April.

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.

The BSP earlier raised the rediscount rates for loans under the peso rediscount facility to 5.3125 percent for loans with maturity of up to 90 days and to 5.3750 percent for loans with maturity of up to 180 days.

Last Nov. 15, the BSP delivered another 25-basis point rate hike to anchor rising inflationary expectations, bringing to 175 basis points the cumulative increase in interest rates so far this year.

The overnight reverse repurchase rate currently stands at 4.75 percent, the overnight deposit and overnight lending rates at 4.25 percent and 5.25 percent, respectively.

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.