Rediscounting loans jump P16.6B amid bullish PHL economy

Data released by the Bangko Sentral ng Pilipinas indicates that BSP rediscounting loans to banking institutions, be they commercial, thrift, or a rural bank, rose 64.3 percent or from P10.1 billion from January to May last year to P16.6 billion in the same period this year amid a strong demand for credit given the stronger-than-expected 6.4 percent growth in the first quarter of the year.

 

The BSP’s rediscounting credit facility helps banks meet temporary liquidity needs by refinancing the loans they extend to their clients. The credit facility also allows a financial institution to borrow money from the BSP using promissory notes and other loan papers as collateral. 

 

In this manner, the BSP influences the volume of credit in the financial system, and in this case, stimulates the economy further by improving spending. 

 

About 78.3 percent of the total rediscounting loans availed by banks in the first five months went to commercial credits while 3.5 percent went to agriculture and industrial clients. 

 

Furthermore, about 8.7 percent of the loans availed went to other services followed by capital expenditures with 6.4 percent, permanent working capital with 2.9 percent, and housing with 0.2 percent.

 

However, the BSP also reported that aggregate loans under the US dollar facility of the Exporters' Dollar and Yen Rediscounting Facility, which is offered by 10 commercial banks benefiting 27 exporters, fell 21.5 percent to $66 million in January to May compared to $84.1 million in the same period last year with no one availing the of the Yen facility.

  

Last year, total rediscounting loan availed of by banking institutions plunged 45 percent to P27.37 billion from 2010’s P49.76 billion.

 

Also, the BSP lowered its Peso rediscount rate further to a record low of four percent per annum under its Peso Rediscount facility for all maturities effective March 5. 

 

It has also pegged the rates for June at 0.23875 percent per annum under the exporter’s rediscounting facility and 0.14429 percent per annum for its Yen facility. — DVM, GMA News