Peso rediscount loans breach P1 B

MANILA, Philippines — Rediscount loans extended to local banks to finance the needs of businesses and households breached the P1 billion mark in the first 11 months, the Bangko Sentral ng Pilipinas (BSP) said.

Out of the total amount disbursed under the peso rediscount facility from January to November this year, the central bank said bulk or 92.3 percent went to commercial credits.

On the other hand, a total of 5.9 percent went to other credits consisting of services while 1.3 percent went to housing.

The BSP said there was no availment under the Exporters Dollar and Rediscount Facility (EDYRF) during the period.

Rediscounting is a privilege of a qualified bank to obtain loans or advances from the BSP using the eligible papers of its borrowers as collaterals. 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.

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, the amount of rediscount loans reached a record P10.76 billion amid higher credit demand particularly for infrastructure projects under the public private partnership (PPP) scheme.

Last June, the BSP’s Monetary Board adopted a unified rediscounting window for all types of banks as it decided to terminate the sunset provision for small banks.

The central bank approved the removal of 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, the regulator said 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 no. 806 establishing rediscounting window II for thrift, rural, and cooperative banks.

Thrift banks were given a sunset period of five years or until November 2018 while rural and cooperative banks were given 10 years or until November 2023 to access rediscount window II at then existing terms.

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.

The regulator also decided to shorten the maximum loan maturity to 180 days from 360 days.