Central bank grants P4-million loan under peso rediscount facility in June
THE CENTRAL BANK granted a P4-million loan to a bank under its rediscount facility in June, marking the first availment since September 2020.
“Under the peso rediscount facility, the sole availment covering the period Jan. 1 to June 30, 2021 amounted to P4 million which represents the rediscount by a bank, under production credits, of a loan that financed industrial processing,” the Bangko Sentral ng Pilipinas (BSP) said in a statement on Monday.
Meanwhile, the Exporters’ Dollar and Yen Rediscount Facility remained untapped in June.
The last time banks tapped the BSP’s peso rediscount window was in September 2020 for loans worth P2.1 billion. Last year, the rediscount facility was only tapped by lenders in March, April, August, and September for total loan availments of P26.9 billion, 77.7% lower than the 2019 level.
The rediscount facility of the BSP lets banks get additional money supply by posting their collectibles from clients as collateral.
This additional money supply — denominated in peso, dollar, or yen — may be used by banks to disburse more loans for corporate or retail clients and tend to unexpected withdrawals.
The P4-million rediscount loan recorded in June, albeit small, reflects the impact of tighter restrictions on businesses, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.
Metro Manila and nearby provinces were placed under the strictest lockdown classification from late March to mid-April as coronavirus infections surged, causing disruptions to business activities. Restrictions have been eased gradually since then and the area is now under the more relaxed general community quarantine.
Mr. Ricafort said rediscount facility availments will continue to be muted in the coming months as banks have ample cash.
“The continued excess liquidity in the financial system since the pandemic started last year would have reduced the need for banks to tap the BSP rediscounting facilities, as seen since the latter part of 2020, though the rising trend in banks’ nonperforming loans (NPL) due to the recent lockdowns would be a risk factor in the coming months that could prompt some availments,” he added.
Various BSP policy measures have released some P2.2 trillion in liquidity into the financial system, equivalent to about 12% of the gross domestic product.
Despite this, bank lending has been tepid and has declined for the sixth straight month by 4.5% in May, reflecting risk aversion among banks due to the crisis.
Bad loans surged by 83% to P479.481 billion as of May from P262 billion a year ago. This brought the NPL ratio to 4.49%, the highest since the 4.61% recorded in May 2008.
JULY RATES
Meanwhile, for this month, the applicable rate for loans availed under the peso rediscount facility is at 2.5%, regardless of maturity.
Meanwhile, dollar and yen-denominated borrowings regardless of maturity will have applicable rates of 2.14575% and 1.9225%, respectively. — L.W.T. Noble
