BSP rediscounting loans grow to billion
Banks have availed of 30.62 billion loans and advances from the central bank’s peso rediscount facility as of end-September to meet their liquidity requirements.
This amount was bigger compared to same time last year of only million. It is also billion more than the previous month’s billion.
The Bangko Sentral ng Pilipinas’ (BSP) peso rediscount facility is a standing credit facility that allow banks to liquefy their position by refinancing loans and using eligible papers of its end-user borrowers as collaterals.
In effect, the rediscounting cycle helps sustain the bank’s funds for relending to its borrowers and, at times, to service withdrawals.
Commercial credits, production credits and other credits are papers eligible for rediscounting.
BSP data show that from January to September, 74.93 percent of rediscounting loans were released as other credits and distributed as other services, capital asset expenditures, permanent working capital and housing.
About 30.93 percent are credits to other services, 28.20 percent for capital asset expenditures, 15.78 percent for permanent working capital and 0.02 percent for housing.
The rest of the rediscounting loans or 25.04 percent went to commercial credits while production credits accounted for only 0.03 percent, according to the BSP.
Rediscounting line have ranges, or from 50 percent to 200 percent of adjusted net worth depending on the total credit score of the applicant bank.
The temporary rediscounting line will not exceed 50 percent of adjusted net worth.
A qualified bank may avail up to 100 percent of its rediscounting line, provided all rediscounting loans are fully collateralized subject to prevailing rediscounting policy, said the BSP.
In 2013 the BSP amended its peso rediscounting facility and created two windows to encourage the big banks to access their temporary funding requirement from the market rather than from the BSP.
The universal and commercial banks have Rediscounting Window I, and thrift banks, rural and cooperative banks have Rediscounting Window II.
In June of last year however, the BSP unified the rediscounting window again and terminated the sunset provision for thrift banks, rural and cooperative banks ahead of the November 2018 schedule after noting that these banks no longer require its own rediscounting window.
The BSP said that based on surveys and the statistical data of thrift banks, rural and cooperative banks, these banks are no longer dependent on BSP funds.