Rediscount loans surge

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REDISCOUNT LOANS taken out by Philippine banks surged in August as the new borrowing rates imposed by the central bank went in full swing.

In a statement, the Bangko Sentral ng Pilipinas (BSP) reported that banks availed of P443 million in peso rediscount loans last month, surging from the P12 million they borrowed in July. This brought the eight-month total to P470 million, sliding from the P10.673 billion borrowed during the comparable year-ago period.

Philippine banks are allowed to borrow from the BSP’s rediscount facility window in order to meet their short-term funding needs, as the central bank fulfills its duty as lender of last resort. Under the facility, banks can submit promissory notes from outstanding client debts as collateral to acquire fresh money supply, which they can use to hand out more loans or service withdrawals.

Bulk of the credit secured by the banks were incurred for commercial credits, which took 83.7% of the sum. On the other hand, borrowing for the services sector accounted for 13.1% of the total, while housing credit stood at 3.2%, the central bank said.

The availments came as new borrowing rates took effect on July 21, which comes after the central bank closed the special window for thrift, rural, and cooperative banks which was in place since 2013.

On the other hand, the dollar and yen rediscount windows still remained untapped as of end-August. Interest rates for foreign currency loans saw mixed movements for September, but such changes were minimal from a month ago.

Rates for dollar borrowings rose to 3.31778% for 90-day loans; 3.38028% for 91- to 180-day loans; and 3.44278% for 181- to 360-day loans, tracking global yield movements which came after US Federal Reserve raised policy rates by another 25 basis points during their June meeting.

Meanwhile, yen-denominated loans will see lower rates at 1.97186% for one to 90-day loans, 2.03436% for 91- to 180-day loans, and 2.09686% for 181- to 360-day loans.