Banks borrow P133M from Bangko Sentral’s rediscount facility in September

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PHILIPPINE BANKS continued to avail of rediscount loans from the Bangko Sentral ng Pilipinas (BSP) in September even as the total amount dropped from the previous month, the central bank reported yesterday.

Peso rediscount loans reached P133 million in September, lower than the P443 million availed by local banks in August. This brought the nine-month tally to P603 million, against the P10.734 billion borrowed during the same period in 2016.

Philippine banks may borrow from the BSP’s rediscount facility so that they can meet their short-term funding needs, which also allows the central bank to fulfill its duty as lender of last resort.

The rediscount window lets banks submit promissory notes using outstanding client debts as collateral to acquire fresh money supply. The cash can then be used to grant more loans or service withdrawals.

Some 87.3% of the loans secured by the lenders were used for commercial lending, the central bank said. A tenth of the funds were extended to the services sector, while some 2.5% went to housing credit.

The borrowings continued for the third straight month after uniform borrowing rates took effect on July 21 as the BSP closed the special window for thrift, rural, and cooperative banks.

Since then, only two rates are imposed for short-term peso borrowings secured by banks: 90-day loans will carry a 3.5625% margin, while 180-day credit lines will carry a 3.625% rate.

Meanwhile, the credit facility for foreign currencies remained untouched for the first nine months of the year.

Interest rates for foreign currency loans moved sideways from the previous month.

Rates for dollar loans picked up to 3.33389% for 90-day loans; 3.39639% for 91- to 180-day loans; and 3.45889% for 181- to 360-day loans.

On the other hand, yen borrowings will carry lower rates at 1.94879% for one to 90-day loans, 2.01129% for 91- to 180-day loans, and 2.07379% for 181- to 360-day loans.

Central bank officials have said that there remains ample liquidity in the Philippine financial system, which limits the use of the rediscount facility as banks continue to hold enough cash for their day-to-day transactions. — Melissa Luz T. Lopez