Rediscounted loans down 61.4% in ’13

Loans rediscounted by local lenders with the central bank remained low at the end of 2013 amid the availability of excess cash in the Philippine economy, the Bangko Sentral ng Pilipinas (BSP) reported.

This came despite the removal of restrictions on the amount of money banks can get from the BSP through the rediscounting facility last November.

According to data from the BSP, total rediscounted loans reached P17.96 billion throughout last year—61.4 percent lower than the P46.50 billion in the same period the year before.

Of the availments for the period, 81.8 percent went to commercial credits, 3.2 percent to agricultural and industrial credits, and 15 percent to other credits consisting of capital expenditures (7.6 percent), other services (6.5 percent), permanent working capital (0.8 percent) and housing (0.1 percent).

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 previously had P20-billion budget for rediscounting for all banks. This limit was removed last November to give banks access to more liquidity, should they need it.

Despite the removal of restrictions, the amount of rediscounted loans stayed low due to record growth rates in domestic liquidity in the country.

The BSP previously reported that domestic liquidity, or M3, grew by a record 36.5 percent in November, coinciding with the start of the complete ban on all nonpooled funds from the central bank’s SDA window.

The growth in liquidity in November was faster than the 32.5-percent rise recorded the month before.

About P800 billion in cash were withdrawn by banks from the BSP’s SDA window since the ban on investment management accounts (IMA) was first announced in the first half.

The ban on nonpooled funds of individual investors in SDAs was first announced in May this year. The BSP said 30 percent of the covered funds had to be unwound by July 2013, while the remaining 70 percent was ordered withdrawn by November. Paolo G. Montecillo