Since the banks are still very liquid, the central bank only released 6.12 million pesos in rediscount loans mainly related to agriculture at the end of September of this year, which is significantly lower than the 26. 9 billion pesos from the same period in 2020.
The Bangko Sentral ng Pilipinas (BSP) said that there are 16 universal and commercial banks that maintain rediscount lines with them worth 353.967 billion pesos. A small portion of this amount is held by four savings banks and 23 rural and cooperative banks which also maintain rediscount lines with the BSP as of August 31.
Rediscount loans of 6.12 million pesos at the end of September were used as production credits used for the processing of agricultural, animal, mineral or industrial products. Most of the production credit, 65.35 percent, was used to finance industrial processing.
About 24.81% of the released loans were for other credits and used as capital expenditures and financing of permanent working capital. Other credits refer to special credit instruments such as, but not limited to, microfinance, housing loans, services, agricultural loans with a long gestation period, and medium and long term loans. .
As part of the relief measures granted to banks while there is still a pandemic, the BSP reduced the term spread on its rediscount facility to zero, which means that the term spread on loans Peso rediscounts against the BSP’s overnight loan rate will continue to be zero regardless of maturity, from 1 day to 180 days.
As defined by the BSP, rediscount is a liquidity facility for qualified banks with active rediscount lines. Temporary liquidity is used by banks to refinance the loans they extend to their customers using qualifying papers such as trade credits, production credits and other credits.
SUBSCRIBE TO THE DAILY NEWSLETTER
CLICK HERE TO JOIN