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Rediscount window left untapped in Nov. on ample liquidity

BANKS DID NOT avail of the rediscount facility of the Bangko Sentral ng Pilipinas (BSP) for the second straight month in November on the back of ample liquidity and reduced demand for loans.

“Total availments by banks under the peso rediscount facility remains unchanged at P26.9 billion,” the central bank said in a statement on Thursday. This is 77.9% lower than the P122.167 billion worth of peso rediscount loans taken out in the same period last year.

The peso rediscount window has only been tapped by lenders in March, April, August, and September so far this year.

Lenders also left the Exporters’ Dollar and Yen Rediscount Facility (EDYRF) untapped in November.

The central bank’s rediscount facility gives banks access to additional money supply by posting their collectibles from clients as collateral. In turn, banks can use the extra cash, denominated in peso, dollar, or yen, to disburse more credit for corporate or retail clients and service unexpected withdrawals.

“Lower demand for loans recently due to the adverse economic impact of the coronavirus disease 2019 reduced the need for banks to tap the rediscount facility,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

Latest central bank data showed outstanding loans disbursed by big banks grew 1.9% year on year in October, the slowest since the same pace was logged in September 2006. The central bank attributed this to tighter credit standards imposed by lenders as well as low confidence among borrowers due to the coronavirus pandemic.

Mr. Ricafort added that banks’ decision not to borrow from the BSP’s rediscount facility also reflects the “relatively large excess liquidity” in the financial system. 

BSP Governor Benjamin E. Diokno earlier said policy measures fired off by the central bank earlier this year have infused approximately P1.9 trillion in liquidity into the financial system, equivalent to 9.6% of the country’s gross domestic product.

Meanwhile, for December, the applicable rate for peso loans regardless of maturity is at 2.5%, which is the borrowing rate following the 25-basis-point cut in benchmark rates last month.

On the other hand, credit to be availed under the EDYRF will be priced at 2.22438% and 1.88383% for dollar and yen-denominated loans, respectively. — L.W.T. Noble

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