There are still no availments of the Bangko Sentral ng Pilipinas’ (BSP) rediscounting facilities both peso-denominated and in foreign currencies for the first seven months of the year.
The banking system is liquid and with the reduction in reserves requirement ratio (RRR) last June 30, it remains awash with cash.
Rediscounting is a BSP credit facility extended to qualified banks with active rediscounting lines. The facility helps banks meet their temporary liquidity needs by refinancing the loans they extend to their clients using the eligible papers of its end-user borrowers.
In a statement on Monday, Aug. 7, the BSP said for the period January 1 up to July 31, there were no releases under the Peso Rediscount Facility and Exporters’ Dollar and Yen Rediscount Facility (EDYRF).
The BSP said that by Tuesday, Aug. 8, the applicable rediscounting rates will 7.3926 percent for 1-90 days loan maturity, and 7.5352 percent for 91-180 days. For the EDYRF, there has not been any availment since 2016.
The peso rediscount rates are based on the BSP overnight lending rate, while the EDYRF rates are based on the applicable benchmark rates.
The BSP said the applicable spread may change periodically to complement the changes in the BSP’s monetary policy stance and movements in market interest rates.
Earlier this year, the BSP issued a new circular amending and clarifying the lending rates for the EDYRF after the discontinued use of LIBOR or the London Inter-bank Offered Rate in Dec. 31, 2021. After June 30 this year, the BSP has replaced LIBOR with its own overnight reference rate.
The BSP also changed the release date of the applicable rates for both terms of the rediscounting windows from every 10th of every month to every seventh of every month.
The rediscount rates will be posted on the BSP’s website on the next banking day if the seventh calendar day of the month falls on a non-banking day. In case of a change in the BSP’s policy rates, the resulting rediscount rates will be posted on the banking day following the said change in the rates.
Rediscounting allows eligible papers such as credit instruments including promissory notes, drafts or bills of exchange for commercial credits.
Production credits are also allowed which are used for production or processing of agricultural, animal, mineral, or industrial products.
Other credits or 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 are also accepted.
In 2022, the BSP rediscounting loans amounted to P15.3 billion.