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Philippines: BSP raises rediscount rates anew
MANILA, Philippines — The Bangko Sentral ng Pilipinas lifted anew the rediscount rates on loans extended to local banks to finance the expansion needs of businesses and households.
In a statement, the BSP said it raised the rediscount rates for loans under the peso rediscount facility to 5.0625 percent from 4.5625 percent for loans with maturity of up to 90 days and to 5.1250 percent from 4.6250 percent for loans with maturity of up to 180 days.
Rediscounting is a privilege of a qualified bank to obtain loans or advances from the BSP using the eligible papers of its borrowers as collaterals. It is a standing credit facility provided by the central bank to help banks liquefy their position by refinancing the loans they extend to their clients.
Rediscount loans reached P20.02 billion from January to August due to higher demand for corporate loans amid the massive infrastructure build up by the government.
Out of the total amount disbursed under the peso rediscount facility, the central bank said the bulk or 69.02 percent went to other credits particularly capital asset expenditures with 41.4 percent, while 30.97 percent went to commercial credits.
On the other hand, 24.1 percent went to permanent working capital, other services with 3.49 percent, housing with 0.03 percent, and production credits with 0.01 percent.
The BSP adopted a unified rediscounting window for all types of banks in June last year as it terminated the sunset provision for small banks. It also shortened the maximum loan maturity to 180 days from 360 days.
Last Sept. 27, the BSP’s Monetary Board delivered its first back-to-back 50-basis point rate hikes to anchor
rising inflationary expectations since shifting to the inflation targeting framework in 2001, bringing to 150 basis points the cumulative increase in interest rates so far this year.
It first raised interest rates by 25 basis points for the first time in more than three years on May 10 followed by another 25 basis points on June 20, 50 basis points – the biggest in 10 years – last Aug. 9, and 50 basis points last Sept. 27.
The overnight reverse repurchase rate currently stands at 4.5 percent, the overnight deposit and overnight lending rates at four percent and five percent, respectively.
Source: https://www.philstar.com/business/2018/10/02/1856377/bsp-raises-rediscount-rates-anew#Bfc8DCHpfIpKfo8F.99