BSP rediscount loans down 37%

Loan exchanges between local banks and the Bangko Sentral ng Pilipinas (BSP) continued to drop at the end of July due to the availability of liquidity that gave lenders enough cash to sustain their growth.

In a statement Monday, the BSP said rediscounted loans by commercial, thrift and rural banks from the start of the year up to July reached P15.91 billion, down 37.1 percent from P25.29 billion in the same seven-month period last year.

The BSP’s rediscounting facility allows banks to sell their receivables to the BSP. Unloading their receivables to the BSP gives banks the cash to continue lending to businesses and households.

The BSP charges an annual interest rate of 3.5 percent for loans extended under the rediscounting facility, or the same as the central bank’s overnight borrowing rate.

The BSP said 82.3 percent of the rediscounted loans were commercial credits, 2.8 percent were for agricultural and industrial loans, while the remaining 14.9 percent were for companies’ capital expenditure needs, services, permanent working capital and housing loans.

At the end of June, domestic liquidity in the country grew 20.3 percent, the fastest expansion in six years, latest documents from the BSP showed. In the same period, loans expanded by 12.3 percent.