Tetangco to banks: Use funds parked in BSP vault

To bolster the country’s strong economic growth, the Bangko Sentral ng Pilipinas (BSP) has urged financial institutions to use the nearly P1 trillion parked in its vault. In an interview with reporters over the weekend, BSP Gov. Amando Tetangco Jr. said that the money — including special deposit accounts or SDAs — should be used for “productive" purposes like funding some infrastructure projects under the Aquino administration’s public-private partnership. “If [banks] have borrowers, they can always take their money out of BSP. And we will welcome them since these funds will be used for productive activities. That means the economy will benefit," Tetangco said. “That is not necessarily inflationary because there is an additional capacity," he pointed out, adding that there is enough liquidity in the financial system. “The challenge here is how to use this liquidity for productive uses," Tetangco added. BSP data showed that bank lending in August accelerated to 12.5 percent, the fastest in 13 months, as more corporate and individual clients borrowed to cope with the 7.9 percent economic growth in the first half of the year. The outstanding loans of banks, excluding reverse repurchase placements with the BSP, totaled P2.184 trillion as of end-August, up by P243 billion a year earlier. Tetangco pointed out that banks passed on the lower rates to borrowers after the BSP lowered the overnight borrowing rate at a record 4 percent and the overnight lending rate at 6 percent. — JE/VS, GMANews.TV