Rediscounting loans down 64% in 8 mos

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) reported yesterday that total rediscounting loan availments by banking institutions slipped 64.4 percent in the first eight months of the year as the country’s resilient banking system remained awash with cash brought about by the strong liquidity in the financial system.

The central bank said total availments under the BSP’s Peso Resdiscount facility amounted to P16.1 billion from January to August this year or P29.1 billion lower than last year’s P45.3 billion.

Rediscounting is a standing credit facility provided by the BSP to help banks meet temporary liquidity needs by refinancing the loans they extend to their clients.

The BSP said 72 percent of the total rediscounting loans in the first eight months of the year availed of by commercial, thrift, and rural banks went to commercial credits while 7.3 percent went to agriculture and industrial clients. The data showed that 8.7 percent went to capital expenditures, 8.4 percent to other services, 2.5 percent to permanent working capital, one percent to housing, and 0.1 percent to microfinance.

Under the exporters’ dollar and yen rediscounting facility, aggregate availments under the dollar facility surged 168 percent $155.9 million in the first eight months of the year from $58.2 million in the same period last year. The facility was offered by nine commercial banks benefiting 27 exporters.

The BSP said there was no availment under the yen facility during the period.

Monetary authorities use rediscounting loans as a monetary tool to regulate liquidity.

Last year, total rediscounting loan availments by banking institutions plunged 88.3 percent to P49.76 billion from P182.46 billion in 2009.

The BSP raised its peso rediscount rate at 4.50 percent per annum under its peso rediscount facility for all maturities effective May 9. It has also pegged the rates for the month of August at 0.19110 percent per annum under the EDYRF and 0.14031 percent per annum for its yen facility.

The BSP raised interest rates by 25 basis points last March 24 and by another 25 basis points last May 5 as a preemptive move to keep inflation expectations well anchored amid rising global oil prices. This brought the overnight borrowing rate to 4.50 percent and the overnight lending rate to 6.50 percent.