By Lee C. Chipongian
The Bangko Sentral ng Pilipinas (BSP) has extended the temporary zero-rate rediscounting for another 60 days or until July 17 as part of relief measures to banks during the lockdown period.
In a memo, BSP Governor Benjamin E. Diokno said the Monetary Board approved the extension of the reduction of the term spread on peso rediscounting loans relative to the BSP’s overnight lending rate to zero regardless of maturity, from 1-day to 180-days.
The BSP also approved the extension of the eligible rediscounting credits for an additional 60 days. This is for the Peso Rediscounting Facility and the Exporter’s Dollar and Yen Rediscount Facility.
The applicable rediscount rate for loans is 3.25 percent for all maturity. The fixed rate will apply until July 17, however, the BSP said this could be extended by the Monetary Board when needed.
As of end-April, the central bank disbursed ₱20.70 billion of peso rediscounting loans, lower compared to same time last year of ₱73.72 billion.
The rediscounting loans – classified by type of underlying credit such as commercial, production or other credits based on the eligible papers offered by banks as collateral – is more than end-March’s ₱6.86 billion.
Rediscounting is a BSP credit facility extended to qualified banks with active rediscounting lines to meet their temporary liquidity needs by refinancing the loans they extend to their clients using the eligible papers of its end-user borrowers.
Commercial credits accounted for 23.47 percent of total rediscounting loans. About 14.20 percent of commercial credits are used for importation and 9.27 percent for the trading of goods. Commercial credits come from the importation, exportation, purchase, sale, local transportation or storage of non-perishable and insured goods or products in authorized bonded warehouses or in other places approved by the Monetary Board.
There are no availments for production credits for the month of April, which is a lockdown and in the middle of the March 17 to April 30 initial quarantine period until it was extended until May 15. Production credits are used for production or processing of agricultural, animal, mineral, or industrial products.
By Lee C. Chipongian