PH banks taking out less loans from BSP
Loans from the central bank’s rediscounting facility continued to shrink at the end of March of this year because of the cheap cash now circulating in the local financial system.
Data released by the Bangko Sentral ng Pilipinas (BSP) this week showed that availments of thrift and rural banks fell by 96.3 percent year-on-year to P10.987 billion at the end of March.
Since the start of the year, none of the country’s 36 universal and commercial banks, which accounted for 90 percent of the banking sector, took out any loans from the rediscounting window.
Rediscounted loans are bank receivables that are sold to the central bank for extra funds, which can subsequently be lent out to businesses and individual borrowers.
The central bank’s rediscounting facility ensures that, in times of tightness in credit, banks still have funds to lend to productive sectors of the economy.
However, the amount of loans secured by banks through the rediscounting facility has been falling steadily since last year due to the availability of cheap funds in the financial system.
Domestic liquidity, or M3, which measures the amount of money in the economy, grew by 36.4 percent year-on-year at the end of February to reach P6.9 trillion. The rise was slower than the record 37.3-percent expansion recorded in January.
Month-on-month, seasonally adjusted M3 rose slightly by 0.9 percent, following the revised 5.1-percent growth of the previous month.
The increase was driven partly by the ban on nonpooled funds being parked in the central bank’s special deposit account (SDA) window, which took effect in November.
The BSP expects growth in liquidity to start decelerating to more normal rates by the second half of the year.
