Rediscount loans drop 82% in Jan

The amount of rediscount loans extended to local banks to finance the needs of businesses and households fell 82 percent in January amid strong liquidity in the financial system.

Data showed availments under the central bank’s peso rediscount facility amounted to P11 million last month or P50 million lower compared to P61 million in the same month a year ago.

Out of the total amount, bulk or 62.3 percent went to capital expenditures under other credits while 37.7 percent went to agricultural credits, the Bangko Sentral ng Pilipinas said.

The BSP has pegged the rates for the rediscounting windows I at 6.125 percent for 30 days, 6.1875 for 90 days; and 6.25 percent for 180 days as well as for the rediscount windows II at four percent for both 30 days and 90 days, 4.0625 for 180 days, and 4.125 percent for 360 days for the month of December.

The rates are based on the overnight borrowing and overnight lending rates that have been in effect since September in 2014.

There were no availments under the central bank’s exporters dollar and yen rediscounting facility (EDYRF) for last month.

US dollar-denominated loans under the EDYRF carry a rate of 2.61 percent for those maturing within 90 days, 2.67 percent for those maturing within 180 days, and 2.74 percent for those maturing within 360 days.

The rediscounting facility allows banks to borrow money from BSP as long as these are backed by loan receivables. This ensures that banks would have funds to lend to productive sectors in time of credit crunch.

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, availments under the central bank’s peso rediscount facility by thrift and rural banks plunged 67.3 percent to P427 million.

Out of the total amount, the BSP said 84.1 percent went to commercial credits followed by 6.4 percent for housing, 5.1 percent for production credits, 2.4 percent for working capital of businesses and two percent for capital expenditures.

Liquidity in the financial system rose 8.3 percent to P8.3 trillion last year.