The central bank said banks did not avail of its rediscount facility in August as credit demand remained weak.
The Bangko Sentral ng Pilipinas (BSP) said in a statement Friday that in the eight months to August, overall use of the facility amounted to P5.52 million, with loan activity taking place only in June and July.
It said there were also no loan availments under the Exporters’ Dollar and Yen Rediscount Facility (EDYRF) in the eight months.
Through the rediscount window, the central bank allows banks tap additional funds in exchange for security such as receivables.
Banks may then use the pesos, dollars, or yen from the facility to release more loans to their corporate or retail clients and service unexpected withdrawals.
It is less compelling for banks to tap the rediscount facility due to muted demand for loans, and with the financial system still awash with cash, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said.
“Various regulatory relief measures mean that banks effectively increased their loanable funds… the liquidity infusion measures, with the objective of encouraging banks to increase their lending activities since the pandemic, also reduced the need for banks to tap the BSP rediscounting facilities,” he added.
The BSP estimates that bank lending slipped for an eighth consecutive month in July, down 0.7% from a year earlier to P9.137 trillion.
Lending continued to decline despite the 5.9% increase in the money supply in June, with banks remaining risk-averse during the prolonged economic downturn.
Last year, the banks only tapped the rediscount window in March, April, August and September, availing of P26.9 billion, down 77.7% from a year earlier.
Meanwhile, the EDYRF was not tapped last year. – Beatrice M. Laforga