Rediscounting loans reach 1.23 billion in November

The central bank released 1.227 billion worth of rediscounting loans as of end-November, 93.1 percent lower compared to the same period last year of 17.735 billion.

The Bangko Sentral ng Pilipinas (BSP) reported that 79.5 percent of the peso rediscounting loans – availed by smaller banks – were used for thrift and rural banks’ commercial credits. The rest are for agricultural and industrial credits (5.6 percent).

About 14.9 percent of the rediscounting loans were released for “other credits” such as working capital (4.9 percent), capital expenditures (4.7 percent), other services (4.2 percent) and housing (1.1 percent).

There are two rediscounting windows (RW). The RW-II is for thrift and rural banks while RW-I is for the big lenders or the universal and commercial banks. The loan maturities for both facilities are a minimum of 30 days up to 360 days.

Last week, the BSP approved a circular implementing additional eli- gibility requirement for banks availing of rediscounting loans for temporary liquidity support.

Based on Circular No. 861, banks that will avail of a rediscounting loan must have not have “chronic reserve deficiency” in its deposit or deposit liabilities prior to the loan drawdown.

The memo explained that for “purposes of determining compliance with the reserve requirement” a bank will be considered non-compliant with the reserve requirement when its actual net reserve position cannot be determined due to delayed submission or non-submission of the relevant reserve report. This is for the each reference week.

Late last year the BSP amended its peso rediscounting window to encourage the big banks to access their temporary funding requirement from the market rather than from the BSP.

The central bank described its rediscounting facility as a standing credit facility provided by the BSP to help banks meet temporary liquidity needs by refinancing the loans they extend to their clients.