Banks’ rediscounting loans surge to R9.77 B in 1st sem

The central bank released R 9.776 billion-worth of rediscounting loans to banks in the first six months of 2018, a huge jump from same period last year of only R15 million.

The Bangko Sentral ng Pilipinas (BSP) does not release details of banks availing of its peso rediscount facility that some banks have been tapping for liquidity purposes.

The BSP said that for the January-June period, majority of rediscounting availments were for “other credits” or about 52.41 percent. “Specifically, these are distributed to capital asset expenditures (40.29 percent), services (7.15 percent), permanent working capital (4.92 percent), and housing (0.05 percent).”

The remaining portions went to commercial credits at 47.57 percent and production credits at 0.02 percent, the BSP added.

Last month, the BSP scrapped the R3-billion limit per bank on rediscountable National Food Authority (NFA) papers but still subject to the single borrower rule (SBL). The new circular also approved the acceptance of syndicated loans and loans with underlying real estate collaterals under Mortgage Trust Indentures (MTI) for availing of the BSP’s rediscounting facility and emergency loans.

BasedonBSPCircularNo.1008, the acceptable syndicated loans for rediscounting have to follow minimum requirements: that the promissory note is negotiable; the master loan agreement allows the endorsement of the promissory note; and the opinion from the borrowing bank’s counsel allows its endorsement. In addition, that “no other act or approval is necessary to perfect the endorsement,” according to the circular.

As a standing credit facility of the BSP, rediscounting enables banks to liquidate and refinance loans using securities as collaterals. Banks turn to rediscounting loans for their temporary liquidity requirements.