BSP rediscount loans reach P15.3 billion in 2022

MANILA, Philippines —  Rediscounting loans extended by the Bangko Sentral ng Pilipinas (BSP) to local banks for their capital asset expenditures amounted to P15.3 billion in 2022, a dramatic increase from a paltry P6.12 million in 2021.

Rediscounting is one of the credit facilities offered by the BSP to qualified banks with active rediscounting lines to meet their temporary liquidity needs by refinancing the loans they extend to their clients using the eligible papers of their end-user borrowers.

The eligible papers include credit instruments such as promissory notes, drafts or bills of exchange of commercial credits, production credits, and other credits.

The peso rediscounting loans extended by the BSP plunged for the second straight year in 2021 amid the massive liquidity released by the central bank in the financial system through its COVID response measures.

Data released by the central bank showed total availments of banks against their rediscounting loans reached only P6.12 million in 2021 compared to P26.9 billion a year earlier.

The bulk or 65.35 percent of the total availments represented the rediscount of production credits particularly for industrial processing, followed by other credits that funded capital asset expenditures (24.81 percent)  and permanent working capital (9.84 percent).

The decline in rediscounting availments last year was attributed to the banks’ high liquidity position coupled by the deceleration of bank lending due to weaker corporate sector performance amid the pandemic.

Despite the decline, banks continue to recognize BSP’s rediscount facilities as a funding option should liquidity no longer be sourced from the market.

About 50 banks maintain rediscounting lines with the BSP as part of their contingency funding plan.

The applicable rediscount rate on loans under the peso rediscount facility for January was set at 7.1888 percent for loans with a loan maturity of up to 90 days and 7.8776 for 180 days for November.

According to the BSP, there was no availment under the exporters’ dollar and yen rediscount facility during the 10-month period last year.

As part of the BSP’s COVID response measures, the BSP extended a zero spread on its peso rediscount loans to allow banks to tap the facility to meet their temporary liquidity needs.