By Lee C. Chipongian
Banks have availed of P118.67 billion temporary liquidity from the Peso Rediscount Facility of the Bangko Sentral ng Pilipinas (BSP) as of end-September this year, almost four times than the P30.62 billion registered in the same period last year.
The BSP’s rediscounting loans is a standing credit facility that allows banks to liquefy their position by refinancing loans and using eligible papers of its end-user borrowers as collaterals. In effect, the rediscounting cycle helps sustain the bank’s funds for relending to its borrowers and, at times, to service withdrawals. Commercial credits, production credits and “other credits” are papers eligible for rediscounting.
For the first 10 months of 2019, about 64.11 percent of rediscounting releases are “other credits” and 39.88 percent of these are bank loans for capital asset expenditures. About 20.20 percent are loans to “other services” while 3.98 percent are for permanent working capital and 0.05 percent for housing loans. “Other credits” are 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.
The BSP said 35.88 percent of the P118.67 billion were commercial credits comprising of 25.66 percent bank loans for importation; 10.21 percent for trading; and 0.01 percent for export of goods or products.
Production credit, which accounts for a mere 0.01 percent of total rediscounting loans, pertains to bank loans for agricultural production.
Compared to end-August, rediscounting loans increased by P2.1 billion month-on-month. Rediscounting lines have ranges from 50 percent to 200 percent of adjusted net worth depending on the total credit score of the applicant bank. The temporary rediscounting line will not exceed 50 percent of adjusted net worth.
A qualified bank may avail up to 100 percent of its rediscounting line, provided all rediscounting loans are fully collateralized subject to prevailing rediscounting policy, said the BSP.
In 2013, the BSP amended its peso rediscounting facility and created two windows to encourage the big banks to access their temporary funding requirement from the market rather than from the BSP. The universal and commercial banks have Rediscounting Window I, and thrift banks, rural and cooperative banks have Rediscounting Window II.
In 2017 however, the BSP unified the rediscounting window again and terminated the sunset provision for thrift banks, rural and cooperative banks ahead of the November 2018 schedule after noting that these banks no longer require its own rediscounting window.
The BSP said that based on surveys and the statistical data of thrift banks, rural and cooperative banks, these banks are no longer dependent on BSP funds.