Peso rediscount loans hit P14.5 billion in January

MANILA, Philippines — Banks continued to take out more loans from the rediscount window of the Bangko Sentral ng Pilipinas (BSP) at the start of the year to further beef up their lending portfolio.

Data released by the central bank showed banks’ total availments under the peso rediscount facility reached P14.46 billion in January. There was no availment under the facility in the same month last 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.

Out of the total amount disbursed under the peso rediscount facility in January, the central bank said the bulk or 51.06 percent went to import loans, while 5.33 percent went to trading loans.

On the other hand, 43.07 percent went to other credits particularly capital asset expenditures that cornered 41.96 percent and other services 1.11 percent.

Rediscount loans extended to local banks to finance the expansion needs of businesses and households hit a record P71.52 billion last year amid the series of interest rate hikes by the central to check rising inflation.

The amount was almost 50 times the P1.59 billion extended to banks in 2017.

The BSP currently pegged the rediscount rates for loans under the peso rediscount facility to 5.3125 percent for loans with maturity of up to 90 days and to 5.3750 percent for loans with maturity of up to 180 days.

As part of its tightening episode to prevent inflation from spiraling out of control, the BSP’s Monetary Board lifted interest rates by 175 basis points in five straight rate-setting meetings from May to November.

Inflation kicked up to 5.2 percent last year from 2.9 percent in 2017 and exceeding the BSP’s two to four percent target due to higher oil and food prices as well as the weak peso.