Rediscount window untapped in Oct.
LENDERS left the central bank’s rediscount facility untouched in October as credit growth remained muted and as there continued to be ample liquidity in the financial system.
“For the period Jan. 1 to Oct. 31, total availments of banks against their rediscounting lines remain unchanged at P6.12 million for loans under the peso rediscount facility,” the Bangko Sentral ng Pilipinas (BSP) said in a statement on Wednesday.
The Exporters’ Dollar and Yen Rediscount Facility (EDYRF) was likewise untouched, it added.
The BSP’s rediscount window gives banks access to additional money supply by posting their collectibles from clients as collateral.
In turn, banks may use the cash — denominated in peso, dollar or yen — to extend more loans to their corporate or retail clients and service unexpected withdrawals.
Banks only tapped the central bank’s rediscount facility in June, July, and September this year.
In 2020, rediscount loans plummeted by 77.7% to P26.9 billion from 2019, with lenders only tapping the window in March, April, August and September, while the EDYRF was also left untouched.
Lenders likely saw reduced need for rediscount loans last month as credit growth remained subdued and as they had enough liquidity, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
“Regulatory relief measures that include alternative compliance for reserve requirements such as allowing new loans to MSMEs (micro-, small-, and medium-sized enterprises) in the computation for reserve requirements, lower risk weights for MSME loans, among others, also partly reduced the need for banks to tap the BSP’s rediscounting facilities,” Mr. Ricafort added.
Bank lending returned to growth in August after eight months of contraction.
Latest BSP data showed bank lending expanded for the second straight month by 2.7% year on year in September.
Meanwhile, M3 or the broadest measure of cash in an economy rose by 8.2% in September, faster than the 6.9% growth in August.
BSP Governor Benjamin E. Diokno last week said their policy measures amid the coronavirus crisis has infused about P2.23 trillion in liquidity into the financial system, equivalent to 12.5% of the country’s 2020 gross domestic product.
NOVEMBER RATES
For this month, the BSP said peso rediscount loans are priced at 2.5%, regardless of maturity.
Meanwhile, the rates for loans under the dollar and yen rediscounting lines, regardless of maturity, are set at 2.13225% and 1.917%. — Luz Wendy T. Noble
