Rediscount loans hit record P85.8 B in 5 months

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

Disbursements hit a record P85.8 billion in the first five months, almost 10 times the P8.92 billion released 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, bulk or 64.1 percent went to other credits or special credit instruments such as but not limited to microfinance, housing loans, services, agricultural loans with long gestation period, and medium and long-term loans.

Data showed loans for capital expenditures accounted for 42.91 percent, while loans to other services comprised 16.32 percent and loans for permanent working capital with a 5.22 percent share.

Commercial credits resulting from the importation, exportation, purchase of non-perishable and insured goods or products in Monetary Board-approved storage facilities cornered 35.48 percent of the total rediscounting loans.

About 25.88 percent comprised import loans while trading loans accounted for  9.6 percent.

There was no availment under the Exporters Dollar and Rediscount Facility (EDYRF), the BSP said.

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  made by the central bank to check rising inflation.

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

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 5.125 percent for loans with maturity of up to 180 days.

The BSP’s Monetary Board slashed interest rates by 25 basis points last May 9 due to easing inflation and the slower-than-expected gross domestic product growth of 5.6 percent in the first quarter from 6.3 percent in the fourth quarter.

This was a reversal of last year’s tightening episode that saw interest rates rise by 175 basis points in five straight rate-setting meetings between May and November to prevent inflation from spiraling out of control.