MANILA, Philippines — Rediscount loans extended to local banks to finance the expansion needs of businesses and households reached P7.65 billion in the first four months of the year, data from the Bangko Sentral ng Pilipinas (BSP) showed.
Bulk or 51.5 percent of the amount went to capital asset expenditures while 42.4 percent went to commercial credits.
On the other hand, 3.17 percent went to permanent working capital, 2.85 percent to services, 0.07 percent to housing and 0.03 percent to production credits.
According to the BSP, there was no availment under the Exporters Dollar and Rediscount Facility (EDYRF) from January to April this year.
Rediscounting is a privilege of a qualified bank to obtain loans or advances from the BSP using the eligible papers of its borrowers as collateral. It is a standing credit facility provided by the central bank to help banks liquefy their position by refinancing the loans they extend to their clients.
The use of the central bank facility has been declining steadily over the past few years as there is enough cash circulating in the economy.
Last year, the amount of rediscount loans plunged to P1.6 billion from a record P10.76 billion in 2016 amid higher credit demand particularly for infrastructure projects under the public private partnership (PPP) scheme.
The BSP’s Monetary Board adopted a unified rediscounting window for all types of banks in June 2017 as it decided to terminate the sunset period of five years for thrift banks and 10 years for rural and cooperative banks in accessing the BSP’s peso rediscount facilities.
Based on statistical data, thrift, rural and cooperative banks are no longer dependent on BSP funds thereby warranting the shortening of the sunset provision.
The BSP introduced major reforms in its peso rediscounting policies in 2013 in line with its lender-of-last-resort function. It issued Circular 806 establishing the Rediscounting Window II for thrift, rural, and cooperative banks.
The sunset period was adopted to allow small banks to use the transition period to improve their deposit mobilization capacities and increase the utilization of other funding sources, thus reducing their dependence on BSP funding over time.
BSP also decided to shorten the maximum loan maturity to 180 days from 360 days.