The Monetary Board (MB) has approved the restructuring of the Bangko Sentral ng Pilipinas (BSP) rediscounting window to align it further with the central bank’s market-based monetary operations framework, and with the international central banking practice of scaling down directed credit operations.
“The banking and export industries were consulted earlier by the BSP to ensure that their views were taken into account in the implementation of the operational adjustments in the BSP rediscounting facilities,” the BSP said in a statement.
The new BSP circular will be take effect on November 15, 2013, involving the establishment of two separate rediscounting windows, one for universal and commercial banks (U/KBs), to be called the Rediscounting Window (RW) I, and one for thrift banks (TBs), cooperative banks (coop banks), and rural banks (RBs), to be called RW II.
The BSP stated that thrift banks, coop banks, and RBs shall be able to access RW II at existing terms, but with a specified term premium per loan tenor, and only for a transition period of five years for TBs and 10 years for coop banks and RBs.
“These banks are expected to use the transition period to improve their deposit mobilization capacities and increase the utilization of other funding sources, thus reducing their dependence on BSP funding over time,” it said.
Meanwhile, the central bank said that by November 2018 TBs will no longer have access to the RW II, while coop banks and RBs will have access to the RW II only until November 2023.
By November 2023, the RW II will no longer be operational and all banks shall access only RW I.
“Banks will be able to access RWs I and II on an open-volume basis consistent with the objective of reorienting the BSP rediscounting window as a regular liquidity standing facility. This implies that requests of all banks to access the facility will be granted regardless of amount, subject to compliance with pre-determined eligibility requirements,” it said.
The Monetary Board also approved operational adjustments in the Exporters Dollar and Yen Rediscount Facility (EDYRF), which will also take effect on November 15, 2013.
“The range of acceptable collateral accepted in the facility was broadened, particularly to include dollar-denominated trust receipts [TRs] covering the importation of goods and raw materials, and dollar term loans to finance capital expenditure or plant expansion/modernization of exporters,” it said.
The Monetary Board noted that to the extent that Philippine exports have a sizeable import content, the acceptance of dollar-denominated TRs and term loans as eligible collateral will help support export financing, and will also enhance the incentive for banks to lend to firms for the importation of raw materials used in the manufacture of export commodities, providing exporters greater access to credit.
“The BSP remains committed to providing the appropriate level of liquidity to the banking system to ensure sustained funding for the country’s growth requirements to the extent that the inflation outlook will allow,” the BSP said.
Mayvelin U. Caraballo