Rediscounting loan transactions down 80.5%, says BSP

Rediscounting loans of banks from the Bangko Sentral ng Pilipinas (BSP) has plunged by 80.5 percent in the first four months of the year, another sign that the central bank has been reducing the flow of liquidity to keep inflation below its target ceiling of 5 percent. Banks took out only P8.01 billion from the BSP's Peso Rediscount facility, lower by P33.1 billion versus the P41.11 billion released in January-April 2010. Rediscounting is a standing credit facility the BSP gives to banks to help them meet temporary liquidity needs. Banks used 69.7 percent of the rediscounting loans for commercial credits while 7.5 percent were for agriculture and industrial clients. BSP data also showed that 10.7 percent went to capital expenditures, 7.7 percent to other services, 2.9 percent to permanent working capital, 1.4 percent to housing, and only 0.1 percent to micro-finance. The Exporters' Dollar and Yen Rediscounting Facility (EDYRF) was more active than the peso window. Total loans from the US dollar facility jumped 59.4 percent to $65 million. Seven commercial banks let 19 exporters draw funds from this. The yen facility was unused. The BSP Peso Rediscount Rate is 4.25 percent a year for all maturities effective 28 March 2011. Loans under the EDYRF, also May are 0.21025 percent per year for dollar loans and 0.14438 percent for yen loans. The EDYRF rates are based on the London Inter-Bank Offered Rate (LIBOR) as of end April 2011. — ELR/VS, GMA News