MANILA, Philippines - The use of rediscounting facility of the Bangko Senral ng Pilipinas by local banks to finance the needs of businesses and households continued to decline in the first seven months of the year.
In a report, the BSP said availments under its peso rediscount facility by thrift and rural banks plunged 69.4 percent to P251.7 million from January to July this year compared to P822.8 million in the same period last year.
Out of the total availments in the first seven months of the year, the BSP said 85.6 percent went to commercial credits followed by 6.9 percent that went to housing, 2.6 percent for working capital of businesses, 2.6 percent for production credits, and 2.3 percent for capital expenditures.
The BSP has pegged the rates for the rediscounting windows I at 6.125 percent for 30 days; 6.1875 for 90 days; and 6.25 percent for 180 days as well as for the rediscount windows II at four percent for both 30 days and 90 days; 4.0625 for 180 days; and 4.125 percent for 360 days for the month of July.
The BSP said the rates that are based on the overnight borrowing and overnight lending rates have been in effect since Sept. 15 last year.
Availments of the central bank’s exporters dollar and yen rediscounting facility (EDYRF) likewise plummeted by 89.4 percent from January to July this year.
The BSP said only one universal bank borrowed $700,000 from the dollar facility during the review period.
The rediscounting facility allows banks to borrow money from the BSP as long as these are backed by loan receivables. This ensures 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.