Loans and advances by the Bangko Sentral ng Pilipinas (BSP) to its supervised financial institutions totaled P90.62 billion as of end-June this year, down by 8.85 percent from same time last year of P83.25 billion.
The BSP mainly extends loans and advances to banks with liquidity issues. In the first three months of 2024, the BSP’s loans and advances amounted to P90.88 billion which was 7.46 percent lower than same period last year of P98.21 billion.
Last year, the total outstanding portfolio stood at P83.33 billion, almost unchanged from 2022 but lower than P121.75 billion in 2021.
During the pandemic, the central bank reported about P170 billion loans and advances compared to pre-2020 numbers of P250 billion and P300 billion.
The BSP said that in as far as its handling of its loan portfolio is concerned, it noted no new past due loan since 2014.
Its past due loans fell by 0.3 percent to P4.51 billion as of end-2023 versus P4.53 billion in 2021. This was attributed to cash collections, foreclosure procedures or dacion of real properties by the Philippine Deposit Insurance Corp. of P4.4 million and the write-off of P10.5 million in 2023.
Banks can apply for discounts, loans and advances from the BSP when under “precarious financial condition” or under serious financial pressures.
There have been lower loans and advances post-pandemic since with the regulatory relief measures to banks and non-banks during the Covid crisis, this resulted to less availments of its loan facilities such as the rediscounting windows.
The BSP also grants financial assistance to banks as fully secured emergency loan. It is a temporary remedial assistance for solvent banks with liquidity problems that are beyond their control, such as a sudden cessation of economic and business activities.
Loans and advances to the PDIC accounted for a large portion of BSP releases, while the rest are channeled through its loan facilities that have fixed terms and lending rates.
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. There were changes in the computation of the peso rediscount in 2023 which affected its availments.
In the past, banks can also avail of the BSP’s overdraft clearing line but this has been terminated last year as part of reforms in the check clearing and settlement.
The BSP in a report said reforms in its credit facilities influence the volume of credit.
By next year, BSP’s loans and advances will again change after the rediscounting facility is replaced with the discount window facility (DWF) in December.
Under the DWF, banks can now directly offer government-issued securities and central bank bills in exchange for advances against these securities. Before the circular, the BSP only rediscounts loans with government securities as additional collateral.
The DWF will have new credit scores under the Credit Information System or CRIS as well as additional application procedures for the DWF line. This will depend on a bank’s total credit score under the CRIS guidelines, which ranges from 25 percent to 100 percent of adjusted capital.
Meanwhile, the loan value is up to 80 percent of the current market value of the government and BSP securities.