The Bangko Sentral ng Pilipinas (BSP) said there were no releases or zero rediscounting loans for the first quarter of 2021 due to banks’ excess liquidity because it is not actively lending to corporates and households.
Banks prefer to place or park their funds in BSP’s open market operations, term deposit facility and securities facility, for interest earnings.
Likewise, the BSP said there were no availments for both the Peso Rediscounting Facility and the Exporters’ Dollar and Yen Rediscount Facility (EDYRF) for January, February and March. The EDYRF has had no availments since 2018.
Rediscounting is a BSP credit facility extended 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 its end-user borrowers. About 50 banks have an active rediscounting line with the BSP amounting to P321 billion as of end 2020, of which 17 are universal and commercial banks. The rediscounting lines are also part of banks’ contingency funding plan.
The BSP has already extended the temporary zero-rate rediscounting until April 30 as part of relief measures to banks while major business areas are still under movement restriction measures to contain the COVID-19 outbreak. This means that the term spread on peso rediscounting loans relative to the BSP’s overnight lending rate will continue to be zero regardless of maturity, from 1-day to 180-days, or at 2.50 percent.
Last year, the PRF released P26.90 billion, down by 77.98 percent compared to end-2019’s P122.17 billion. The big banks accounted for P26 billion of the total while the rest or almost P1 billion were released to thrift and rural/cooperative banks.
There were less banks that availed of rediscounting loans during the lockdown period, in fact the availments were frozen at P25-27 billion in the last half of 2020.