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Banks leave rediscount facility untapped in Feb.

LENDERS LEFT the central bank’s rediscount facility untouched in February as lower demand for credit amid ample liquidity reduced the need for the window.

“There are no availments under the peso rediscount facility and EDYRF (Exporters’ Dollar and Yen Rediscount Facility) covering the period Jan 1. to Feb. 28,” the Bangko Sentral ng Pilipinas said in a statement on Wednesday.

February marked the fifth straight month that banks did not use the rediscount facility.

Last year, the rediscount window was only tapped in March, April, August, and September. This resulted in cumulative loans declining by 77.7% to P26.9 billion from the 2019 level.

Meanwhile, the EDYRF was left totally untouched in 2020.

The central bank’s rediscount window allows banks to access additional liquidity by letting them post collectibles from clients as collateral. In turn, lenders can use the cash, which could be in peso, dollar, or yen, to lend more to their corporate or retail clients and service unexpected withdrawals.

Lenders’ decision to not tap the rediscount facility last month reflected the continued decline in outstanding loans, an analyst said.

“Slower demand for loans has been a major factor that reduced banks’ need to tap the BSP rediscounting facilities,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

He added the lack of rediscount loans also showed banks still have ample liquidity.

BSP Governor Benjamin E. Diokno has said central bank measures amid the pandemic have armed the financial system with P2 trillion in additional liquidity, equivalent to about 10% of the country’s gross domestic product.

However, lending remained tepid and even declined for the second straight month in February. BSP data showed outstanding loans by big banks fell 2.4% year on year in February as lenders tightened their credit standards to guard against bad debt.

For this month, the rate for peso rediscount loans is at 2.5% regardless of maturity.

Meanwhile, March applicable rates for all dollar and yen-denominated rediscount loans are at 2.18838% and 1.918%, respectively. — Luz Wendy T. Noble

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