BSP sets uniform bank rediscount rates
Updated June 14, 2017 – 12:00am
http://www.philstar.com/
MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) is set to implement a unified rediscounting window for all types of banks as it decided to terminate the sunset provision for small banks.
Based on statistical data, the regulator said thrift, rural and cooperative banks are no longer dependent on BSP funds, thereby warranting the shortening of the sunset provision.
“This was validated by the results of a conducted survey of rediscounting banks and through consultative meetings with banking groups,” the BSP said.
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.
The BSP introduced major reforms in its peso rediscounting policies in 2013 in line with its lender-of-last-resort function. It issued Circular 806 establishing the Rediscounting Window II for thrift, rural, and cooperative banks.
Thrift banks were given a sunset period of five years or until November 2018 while rural and cooperative banks were given 10 years or until November 2023 to access Rediscount Window II at the then existing terms.
The sunset period was adopted to allow small banks to use the transition period to improve their deposit mobilization capacities and increase the utilization of other funding sources, thus reducing their dependence on BSP funding over time.
“Following the termination of the sunset provision, all banks shall access a unified rediscounting window which shall adopt the terms under Rediscount Window I,” the BSP said.
The Rediscount Window I available for big or universal and commercial banks with a rate of 3.5625 percent for loans with a maturity of 90 days and 3.625 percent for 180 days.
The BSP also decided to adjust the rediscount rates to the overnight lending rate currently pegged at 3.5 percent plus 0.0625 percent for loans maturing 90 days and the overnight lending rate of 3.5 percent plus 0.1250 percent for 180 days.
The regulator also decided to shorten the maximum loan maturity to 180 days from 360 days.
Latest data showed total availments under the peso rediscount facility amounted to P15 million in the first five months. Of the total amount, 97.5 percent of the total credits consisted of housing, 1.5 percent went to production credits, and one percent for working capital.
