BANKS tapped the peso rediscount facility of the Bangko Sentral ng Pilipinas (BSP) for the second straight month in July, but availments remained low due to excess liquidity in the financial system.
“For the period Jan. 1 to July 31, 2021, total availments of banks under the peso rediscount facility amounted to P5.519 million,” the central bank said in a statement on Tuesday.
This followed the P4-million borrowing in June, which was by a single lender and was the first time the facility was tapped this year. This means availments in July totaled P1.519 million.
In 2020, banks only took out loans from the peso rediscount facility in March, April, August, and September for total availments of P26.9 billion, down by 77.7% from the 2019 level.
The BSP said nearly three-fourths or 72.48% of the peso rediscount loans granted in the first seven months of 2021 were used to fund production, particularly financing industrial processing. The remaining 27.52% went to capital asset expenditures.
Meanwhile, the central bank’s dollar and yen rediscount windows remained untouched.
Through the rediscount window, the BSP lets banks have access to additional money supply by posting their collectibles from clients as collateral.
In turn, these lenders may use the fresh cash — denominated in the peso, dollar or yen — to grant loans to their corporate or retail clients and service unexpected withdrawals.
The low availments from the rediscount window reflects the muted demand for loans due to the coronavirus disease 2019 (COVID-19) pandemic, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
“Availments remained low due to the excess liquidity in the financial system and lower demand for loans,” Mr. Ricafort said in a text message.
Liquidity freed up by the BSP’s easing measures amid the crisis have released some P2 trillion into the financial system, equivalent to about 12% of the country’s gross domestic product.
However, despite the excess cash, lending has been contracting since December, declining by 2% in June, as both banks and borrowers remain cautious due to the uncertain economic environment.
Mr. Ricafort said banks may tap the rediscount window anew for additional money supply as Metro Manila and some provinces are under strict lockdown from Aug. 6-20 to help curb a surge in COVID-19 cases due to the more transmissible Delta variant.
Meanwhile, for this month, applicable rate for peso rediscount loans regardless of maturity remains at 2.5%
On the other hand, loans under the dollar and yen credit lines regardless of maturity will have rates of 1.897% and 2.11775%, respectively. — LWTN