THE RATES have been raised following new rules from the Monetary Board. — BW FILE PHOTO

RATES APPLICABLE for the central bank’s peso rediscount facility this month as well as dollar or yen-denominated loans have been increased after the adoption of a flexible term premium which was approved by the Monetary Board.

“Such amendment in the rediscount rates is part of the broader reforms of the BSP (Bangko Sentral ng Pilipinas) to bring its policies in line with its lender of last resort function and to ensure that rediscounting policies remain relevant to the present and future demands on monetary management,” the BSP said in a statement on Tuesday.

In a previous circular letter, BSP Governor Benjamin E. Diokno said the yield on the peso rediscount facility will be the overnight lending rate which is currently at four percent to be added to a spread depending on the term of the loan.

“The appropriate spread for each term of the loan may change periodically to complement changes in the BSP’s monetary policy goals and to reflect movements in the market interest rates,” the central bank said.

With this, January peso rediscount rates as of Jan. 28 for loans with tenors of up to three months and up to six months are now at 5.4465% and 6.393%, up from the previously posted 4.5625% and 4.625%, respectively.

On the other hand, for the Exporters Dollar and Yen Rediscount Facility (EDYRF), computation for the yields will continue to be based on the 90-day London Inter-Bank Offered Rate plus the spread depending on the tenor of the credits, the BSP said.

For the dollar credit lines that form part of the EDYRF, increased rate for loans maturing from one to 90 days is at 4.85488% from (3.90838%); those with a tenor within a 91-180 day time frame will have a yield of 5.80138 (from 3.97088%); and those with a term of 181 days up to a year have a rate of 7.69438% from the initially posted 4.0338%.

Meanwhile, rates for yen loans have been increased to 2.89917% (from 1.95267%) for one to 90-day loans; 3.84567% (from 2.01517%) for credits with a maturity period of 91-180 days; and 5.73867% (from 2.07767%) for loans that will mature within 181-360 days.

The central bank lets banks access additional money supply by posting their collectibles from clients as collateral through the rediscount window.

This gives lenders the opportunity to use fresh cash — which could be in peso, dollar, or yen — to disburse more loans for corporate or retail clients and service unexpected withdrawals.

In 2019, peso rediscount loans totaled P122.167 billion. Banks did not avail of the peso rediscount facility in the last two months of the year as successive reserve requirement ratio (RRR) cuts from the BSP provided them additional liquidity.

The RRR for big banks now stands at 14% while that for thrift and rural lenders are at five and three percent, respectively after a total of 400 basis points reductions from the BSP last year. — L.W.T. Noble