Bank rediscount loans fall 63% in 10 months

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) reported yesterday the amount of rediscount loans extended to local banks to finance the needs of businesses and households fell 63 percent in the first 10 months of the year.

Availments under the BSP’s peso rediscount facility by thrift and rural banks amounted to P418 million from January to October this year or P699 million lower compared to P1.12 billion in the same period last year.

Of the total amount, the BSP said 88.1 percent went to commercial credits followed by 4.8 percent for production credits, 4.2 percent to housing, 1.6 percent for working capital of businesses, and 1.3 percent for capital expenditures.

 The BSP has pegged the rates for the rediscounting windows I at 6.125 percent for 30 days; 6.1875 percent 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 percent for 180 days; and 4.125 percent for 360 days for the month of September.

The BSP said the rates that are based on the overnight borrowing and overnight lending rates have been in effect since Sept. 15 last year.

 Likewise, availments of the central bank’s exporters dollar and yen rediscounting facility (EDYRF) plunged 92 percent from January to October this year.

The BSP said only one universal bank borrowed $700,000 from the dollar facility compared to $8.8 million availed in the same period last year.

US dollar-denominated loans under the EDYRF carry a rate of 2.33410 percent for those with maturing within 90 days; 2.39660 percent for those maturing within 180 days; and 2.45910 percent for those maturing within 360 days.

Loans denominated in yen carry a rate of 2.08143 percent for 90 days; 2.14393 percent for 180 days; and 2.20643 percent for 360 days.

The rediscounting facility allows banks to borrow money from the BSP as long as these are backed by loan receivables. This ensures 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.