Peso rediscount loans reach P10.7 B in 9 months

MANILA, Philippines - The amount of rediscount loans reached a record P10.73 billion in the first nine months on the back of higher credit demand particularly for infrastructure projects under the public private partnership (PPP) scheme.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed rediscount loans extended to local banks to finance the needs of businesses and households only amounted to P397 million from January to September last year.

Out of the total amount, the central bank said the bulk or 76 percent went to capital expenditures, permanent working capital and other service activities, while 24 percent went to commercial credits while less than 0.1 percent went to production credits.

The BSP has pegged the rates for the rediscounting windows I at 3.5625 percent for 30 days and 3.6250 percent for 180 days as well as for the rediscount windows II at three percent for 30 days; 3.0625 for 180 days; and 3.1250 percent for 360 days for the month of October.

The BSP adopted the interest rate corridor (IRC) system prompting the adjustment of key policy rates last June 3.

Last Sept. 22, the BSP kept interest rates steady since October 2014. The overnight lending rate was pegged at 3.5 percent, the overnight reverse repurchase at three percent, and the overnight deposit at 2.5 percent.

Availments under the central bank’s exporters dollar and yen rediscounting facility (EDYRF) amounted to $10.4 million in the first half. There was no yen-denominated availment under the EDYRF for the same period.

US dollar-denominated loans under the EDYRF carry a rate of 2.85367 percent for those with maturing within 90 days; 2.91617 percent for those maturing within 180 days; and 2.97867 percent for those maturing within 360 days.

Loans denominated in yen carry a rate of 1.97407 percent for 90 days; 2.03657 percent for 180 days; and 2.09907 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.

Last year, availments under the central bank’s peso rediscount facility by thrift and rural banks plunged 67.3 percent to P427 million from P1.34 billion in 2014.