Rediscount loans plunge 67%

MANILA, Philippines - Rediscount loans extended to local banks to finance the needs of businesses and households plunged 67.3 percent last year due to the strong liquidity in the financial system, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Availments under the central bank’s peso rediscount facility by thrift and rural banks amounted to P427 million last year, P901 million lower compared to P1.34 billion in 2014.

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.

Availments of the central bank’s exporters dollar and yen rediscounting facility (EDYRF) likewise plunged 93 percent to $700,000 last year from $9.2 million in 2014.

US dollar-denominated loans under the EDYRF carry a rate of 2.61270 percent for those with maturing within 90 days; 2.67520 percent for those maturing within 180 days; and 2.73770 percent for those maturing within 360 days.

Loans denominated in yen carry a rate of 2.08286 percent for 90 days; 2.14536 percent for 180 days; and 2.20786 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 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.