By Lee C. Chipongian
Published: June 13, 2013
The Bangko Sentral ng Pilipinas (BSP) has released P14.624 billion worth of liquidity-enhancing assistance to banks in the first five months, 11.9 percent lower compared to the same period last year.
The BSP’s short-term loans under its Peso Rediscounting Facility, has a revolving budget of P20 billion. It is available credit for commercial banks, thrift banks and rural banks.
The central bank said that 86.6 percent of the rediscounting loans are borrowed by banks as commercial credits while 2.1 percent are agricultural and industrial loans. About 11.3 percent are loans granted to finance other services, capital expenditures, permanent working capital and for housing.
The rates for rediscounting loans of 3.5 percent per year for all maturities have been unchanged since October 2012. Loans under the Exporters Dollar and Yen Rediscount Facility, on the other hand, have rates based LIBOR rates.
Under the foreign currency credit facility, the BSP reported that as of end-May there were seven commercial banks and one thrift bank that have availed $61.5 million in loans, a lower amount compared to the same period last year of $66 million. Banks only availed of the US dollar facility.
The demand for temporary liquidity has been on a decline for the past three years, which was why the BSP reduced the rediscounting facility budget from P60 billion to P20 billion in 2012.
Rediscounting, by central bank definition, is a standing credit facility provided by the BSP to help banks meet temporary liquidity needs by refinancing the loans they extend to their clients. It is a monetary tool to regulate liquidity and banks can renew access to the credit facility once a previous loan is fully paid.
Aside from rediscounting loans, the BSP also offers emergency loans and overnight clearing line to address banks’ liquidity concerns.