Rediscount loans fall 65%

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) reported yesterday rediscount loans extended to local banks to finance the needs of businesses and households fell 65.4 percent in the first 11 months.

Availments under the BSP’s peso rediscount facility by thrift and rural banks amounted to P424 million from January to November, P803 million lower compared to P1.23 billion in the same period last year.

Out of the total amount, the BSP said 86.1 percent went to commercial credits followed by 5.2 percent for production credits, 5.1 percent to housing, 1.6 percent for working capital of businesses, and 1.3 percent for capital expenditures.

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.

Likewise, availments of the central bank’s exporters dollar and yen rediscounting facility (EDYRF) likewise plunged 92.4 percent from January to November this year.

The BSP said only one universal bank borrowed $700,000 from the dollar facility compared to $9.2 million availed in the same period last year.

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.