Rediscount loans steady at P117 billion in 8 months

MANILA, Philippines — Banks continued to further beef up their lending portfolios by taking out more loans from the rediscount window of the Bangko Sentral ng Pilipinas (BSP) in the first eight months.

Data released by the central bank showed disbursements remained steady at P116.57 billion from January to August, almost six times the P20.02 billion released in the same period last year.

There were no releases under the peso rediscount facility last August.

Rediscounting is a privilege of a qualified bank to obtain loans or advances from the BSP using the eligible papers of its borrowers as collaterals. 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, the bulk or 64.93 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 cornered 40.3 percent, loans to other services accounted for 20.6 percent, while loans for permanent working capital accounted for 4.1 percent.

The BSP said commercial credits resulting from the importation, exportation, purchase, sale, local transportation or storage of non-perishable and insured goods or products in Monetary Board-approved storage facilities cornered a share of 35.1 percent of the total rediscounting loans.

About 24.7 percent were to import loans, while 10.4 percent went to trading loans.

Likewise, there was no availment under the Exporters Dollar and Rediscount Facility (EDYRF) from January to August.

The BSP currently pegged the rediscount rates for loans under the peso rediscount facility at 4.81250 percent for loans with maturity of up to 90 days and 4.87500 percent for loans with maturity of up to 180 days.

The BSP has so far slashed interest rates by 50 basis points due to easing inflation and the slower-than-expected gross domestic product (GDP) growth.

Inflation eased to a 35-month low of 1.7 percent in August from 2.4 percent in July, bringing the average to three percent in the first eight months of the year and well within the BSP’s two to four percent target.

Aside from the rate cuts, the central bank also resumed the reduction of the reserve requirement ratio by 200 basis points for big and mid-sized banks and by 100 basis points for small banks, releasing about P210 billion into the financial system to boost economic activity.