Banks borrow P20.7 billion from rediscount window

MANILA, Philippines — Philippine banks borrowed close to P14 billion from the peso rediscounting loan facility of the Bangko Sentral ng Pilpinas (BSP) last month to meet their temporary liquidity needs amid the coronavirus disease 2019 or COVID-19 pandemic.

This brought to P20.7 billion the amount borrowed by banks to meet their temporary liquidity needs by refinancing the loans they extend to their clients using the eligible papers of its end-user borrowers from January to April this year.

Of the total amount borrowed in April, the BSP said loans for capital asset expenditures cornered the biggest share of 62.7 percent, followed by permanent working capital with 13.9 percent.

The central bank said commercial credits accounted for 23.5 percent of total rediscounting loans and pertain to bank loans for importation with 14.2 percent and trading of goods with 9.3 percent.

More banks have been tapping the facility after the central bank’s Monetary Board approved earlier the temporary reduction in the spread on peso rediscounting loans relative to the central bank’s overnight lending rate to zero for a period of 60 days or until May 19.

As such, the central bank now charges a flat interest rate of 3.25 percent for loans under the peso rediscount facility, regardless of loan maturity.

Prior to the removal of the spread on peso rediscounting loans, there were no availments in the first two months of the year.

On the other hand, the BSP said there were no loan availments under the exporters dollar and yen rediscount facilities which were also reduced.

The rate for the US dollar loans stood at 3.88213 percent for 90 days, 4.31413 percent for 180 days, and 5.17813 percent for 360 days. On the other hand, the rate for yen loans was pegged at 2.37883 percent for 90 days, 2.81083 percent for 180 days, and 3.67483 percent for 360 days.

Last year, loans from the peso rediscount window of the central bank jumped 71 percent to a record high of P122.17 billion from P71.52 billion in 2018.

The central bank has taken bolder moves such as deeper rate cuts and further reduction of the reserve requirement for banks to boost market confidence and cushion the economic fallout from the once-in-a-lifetime health crisis.