25 Sep BSP revises rediscounting facility
THE BANGKO SENTRAL ng Pilipinas (BSP) has launched an “enhanced” rediscounting facility that would let banks directly offer central bank securities in exchange for advances.
The Discount Window Facility will replace the old rediscounting facility, it said in a statement late on Tuesday.
“The BSP will enhance its rediscounting facility, adding advances against government and BSP securities, helping align its credit operations with global best practices,” the BSP said.
It will take effect in November, it added.
BSP only rediscounts loans, accepting government securities as additional collateral. Under the new facility, banks can directly offer state debt and BSP securities in exchange for advances, it said.
“This gives the BSP an additional mode to influence credit volume, consistent with its objectives of maintaining price and financial stability,” it added.
Banks can tap approved Discount Window Facility lines by rediscounting loans or by offering their government or BSP securities for advances.
“Banks can tap existing rediscounting lines until these lines expire a year after their effectivity, but only for rediscounting loans,” it added.
Credit instruments that are eligible for rediscounting include interbank, extended and restructured, past due, unsecured and personal consumption loans. It also covers loans to nonbank financial institutions and those funded by other borrowings.
Meanwhile, the BSP said it would accept unencumbered marketable debt instruments issued by the National Government or BSP as eligible collaterals for advances.
“Banks shall execute a security agreement and register any notice or take any action necessary to perfect the Bangko Sentral’s security interest over their eligible collaterals and make it binding against third parties prior to any availments,” it added. — Luisa Maria Jacinta C. Jocson