BSP eases rediscount loan rules
By Melissa Luz T. Lopez, Senior Reporter
BANKS will soon have more leeway in acquiring short-term funding from the Bangko Sentral ng Pilipinas (BSP) as the regulator said it will now accept syndicated loans as collateral.
BSP Circular 1008 relaxed the central bank’s rules on rediscount loans, which will essentially allow lenders to avail of bigger amounts via rediscounting.
The new rules now accept syndicated loans — or those arranged by a group of lenders for a single borrower — as collateral for banks in using the BSP’s rediscount window.
BSP Governor Nestor A. Espenilla, Jr. signed the circular on June 14. The new guidelines take effect 15 days after it is officially published in the Official Gazette or in a newspaper.
The rediscount facility allows local banks to get hold of additional money supply by posting their collectibles from clients as their collateral. In turn, they can use the fresh cash to grant more loans or service unexpected withdrawals, depending on the bank’s needs.
The BSP allows banks to get additional money supply in the peso, dollar or yen. The rediscount window also allows the central bank to fulfill its mandate of being a “lender of last resort” should banks find themselves short of liquidity.
Apart from syndicated loans, the BSP will also start accepting loans with underlying real estate collaterals “for rediscounting and emergency loans.”
To add, the regulator also lifted the P3-billion cap per bank on using rediscountable National Food Authority (NFA) papers for rediscount credit.
However, the cap remains at 25% of a bank’s net worth as far as rediscount availments using NFA collectibles are concerned.
These are subject to certain requirements, which include the requirement that such promissory notes are negotiable.
Currently, the BSP accepts a bank’s loan collectibles like bills, promissory notes letters of credit, trust receipts, property mortgages, credit guarantees and debt papers in awarding rediscount credits, to name a few.
Total rediscount borrowings reached P8.917 billion as of end-May, well above the P15 million availed during the comparable period in 2017.
Nearly half of the loans were acquired to finance capital asset spending while borrowings for commercial credits took a 43.87% share, according to latest available BSP data.
Loans maturing in 90 days or lower are charged a 3.8125% rate while 180-day credit lines carry a 3.875% spread. The rediscount rates are likely to go higher following a fresh rate hike announced by the central bank on Wednesday.
