Rediscount loans surge in 2 months

MANILA, Philippines — Banks continued to take out more loans from the rediscount window of the Bangko Sentral ng Pilipinas (BSP).

Data released by the central bank showed banks’ total availments under the peso rediscount facility reached P34.89 billion in the first two months, 500 percent higher than the P5.81 billion recorded in the same period 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 and February, the bulk or 58 percent went to other credits particularly for capital asset expenditures (40.6 percent), permanent working capital (11.92 percent) as well as other services real estate and miscellaneous business activities (5.4 percent).

The remaining 42 percent went to commercial credits to finance importation with 31.2 percent and trading of goods (10.8 percent).

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.

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 bank to check rising inflation.

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

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, exceeding the BSP’s two to four percent target due to higher oil and food prices as well as the weak peso.

The consumer price index eased steadily to 3.8 percent in February after peaking at 6.7 percent in September and October last year, allowing the BSP to take a breather from its tightening episode by keeping rates unchanged in December and February.