Bangko Sentral peso lending remains popular on record low interest rates

The rediscount loans for exporters given by the Bangko Sentral ng Pilipinas (BSP) remain popular among banks because of the record low interest rates, central bank data released Friday showed. According to the Bangko Sentral, peso availments under its rediscount facility rose 5.4 percent to P12.678 billion as of April 30 from P12.028 billion in the same period last year. The facility's interest rate was pegged at a record low 3.5 percent for overnight borrowing, which the Monetary Board (MB) kept unchanged since October last year in a bid to stoke economic growth. "The Peso Rediscount Rate is based on the applicable BSP overnight reverse repurchase rate," the central bank said. "The MB decided to maintain the same during its last policy meeting on April 25," it added. The rediscount facility allows banks to meet short-term liquidity needs by borrowing from the central bank and using their clients’ promissory notes as collateral. Bulk or 87.1 percent of the loans covered commercial credit, 1.9 percent went to agriculture and industry, 4.6 percent went to capital expenditure, and the remaining 6.4 percent funded other services and working capital of companies. Dollar availments under the Bangko Sentral's Exporters Dollar and Yen Rediscount Facility, however, dipped by 0.8 percent to $54.2 million as of end-April from $54.8 million year-on-year. Credit was lent to seven commercial banks that benefited 25 exporters. No banks tapped the yen-denominated facility, the central bank said. Using the London Interbank Offered Rate or Libor, the rates for exporters' dollar loans were set at 0.19820 percent a year, and for the yen rediscount facility at 0.12143 percent. — Siegfrid Alegado/VS, GMA News