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Business

Bank rediscount loans hit record P73.7 billion in 4 months

Lawrence Agcaoili - The Philippine Star
Bank rediscount loans hit record P73.7 billion in 4 months
This is almost 10 times the P7.65 billion loans availed in the same period last year due to the tightening liquidity in the financial system.

MANILA, Philippines — Loans taken out by banks from the rediscount window of the Bangko Sentral ng Pilipinas (BSP) reached an all-time high of P73.7 billion in the first four months.

This is almost 10 times the P7.65 billion loans availed in the same period last year due to the tightening liquidity in the financial system.

Rediscount loans extended to local banks to finance the expansion needs of businesses and households from January to April already exceeded the record P71.52 billion disbursements last year amid the series of interest rate hikes by the central bank to check rising inflation.

Data released by the central bank showed 64.9 percent of the total amount disbursed under the peso rediscount, facility went to other credits particularly for capital asset expenditures with 49.7 percent, other services (9.1 percent), permanent working capital (5.9 percent) and housing loans (0.07 percent).

The balance of 35.1 percent went to import loans with 27.2 percent and trading of goods (7.8 percent).

There was no availment for the exporters dollar and yen rediscount facility.

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.

The BSP currently pegged the rediscount rates for loans under the peso rediscount facility to 5.0625 percent for loans with maturity of up to 90 days and to 5.1250 percent for loans with maturity of up to 180 days.

On Thursday, the BSP’s Monetary Board reversed its tightening episode last year by slashing interest rates by 25 basis points as inflation eased for the sixth straight month to a 16-month low of three percent in April from 3.3 percent in March.

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 a weak peso.

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