Rediscount loans fall 95.6% amid high liquidity

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The amount of loans availed of by thrift and rural banks under the peso rediscount facility of the central bank plunged by 95.6 percent in the first five months compared with the year-earlier level, indicating that domestic banks remained awash with cash and the financial system itself is highly liquid.

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According to Bangko Sentral ng Pilipinas (BSP) data, loans taken out by thrift and rural banks under the BSP’s rediscounting facility fell to P640 million in January to May from P14.624 billion in the same period a year earlier.

The peso-rediscounting window is facilitated by the BSP to help banks meet their liquidity requirements. Under this facility, qualified banks may sell their eligible debt to the BSP if they need extra cash for various purposes, including for lending to businesses and individual borrowers.

Of the P640 million rediscounted loans released through the banks in the five-month period, 81.1 percent were commercial credits, 3.9 percent were agricultural and industrial credits, and the remaining 15 percent were for other uses such as permanent working capital (6.6 percent), other services (5.2 percent), capital expenditure (1.6 percent), and housing (1.6 percent).

Banks’ use of the exporters dollar and yen rediscount facility also fell 93 percent year-on-year in the period, further proof that banks remain awash with cash and able to finance even their clients’ foreign exchange needs.

Only one universal bank and one thrift bank availed of a combined $4.3 million of the financing facility, benefiting two exporters. This compares with $61.5 million in rediscount loans from this facility taken out in the first five months last year, the BSP said.

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