The Monetary Board (MB), in its meeting dated 24 September 2020, approved, among others, the further extension of the temporary reduction of the term spread on Peso, US Dollar (USD) and Japanese Yen (JPY) rediscounting loans until 31 January 2021 as part of the BSP’s measures to continuously provide the needed liquidity to banks for purposes of maintaining price and financial stability as the economy recovers from the effects of Corona Virus Disease 2019 pandemic in the Philippines. As such and in view of the MB’s decision on 01 October 2020 to maintain the policy rates, the applicable BSP rediscount rate for loans under the Peso Rediscount Facility remains at 2.75 percent, regardless of loan maturity (i.e., 1-180 days), while rediscount rates for loans under the Exporters’ Dollar and Yen Rediscount Facility (EDYRF) for the month of October 2020 have been set at 2.22038 percent for USD and 1.90083 percent for JPY, regardless of loan maturity (i.e., 1-360 days).
For the period 01 January to 30 September 2020, total availments1 by banks under the Peso Rediscount2 Facility amounted to ₱26.9 billion. These availments represent borrowings against banks’ credits on transactions related to Commercial and Other Credits. Other Credits, which comprise of 81.94 percent of the total rediscounting loans, pertain to bank loans for capital asset expenditures (71.26 percent), permanent working capital (10.67 percent) and housing (0.01 percent). Meanwhile, Commercial Credits which is at 18.06 percent of the total rediscounting loans pertain to bank loans for importation (10.93 percent) and trading (7.13 percent) of goods. No bank availed under the EDYRF as of 30 September 2020.
1 Rediscounting availments are classified by type of underlying credit (i.e. Commercial, Production and Other Credits) based on the eligible papers offered by banks as collateral. The BSP does not allocate credits on specific sectors nor engage in development banking or financing in accordance with Section 128 of Republic Act (R.A.) No. 7653, as amended by R.A. No. 11211, otherwise known as “The New Central Bank Act”.
2 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. These eligible papers include credit instruments such as promissory notes, drafts or bills of exchange of the following nature: a) Commercial Credits – resulting 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 MB; b) Production Credits – used for production or processing of agricultural, animal, mineral, or industrial products; or c) Other Credits – special credit instruments such as but not limited to microfinance, housing loans, services, agricultural loans with long gestation period, and medium and long-term loans.
Source: Bangko Sentral ng Pilipinas (BSP)