HOUSEHOLDS and businesses across the Philippines, particularly the micro, small and medium enterprises (MSMEs), have not taken advantage of the more-than-ample liquidity in the financial system the past nine months, as loans from the sector dropped precipitously based on latest data from the Bangko Sentral ng Pilipinas (BSP).
According to the BSP, thrift and rural lending to MSMEs, as reflected in so-called rediscounted loans, amounted to only P1 billion as of end-September this year from more than P17 billion a year ago, representing a 94-percent drop at precisely the time when lenders, large and small, reoriented their lending policies and catered to the financing requirements of the micro and SME borrowers out there.
The drop in so-called rediscounted loans brought before the BSP betrays a more recent phenomenon in the banking business in which the competition for MSME clients has escalated at a pace that must be killing the weaker and less financially endowed members of the lending business.
Banks, thrift and rural lending institutions in this case, normally bring their receivables for quick cash at the BSP’s rediscounting window, making up for the discount in the face value of the surrendered IOUs by quickly turning around and lending the money again.
But the banks continue to detach themselves from the BSP’s rediscounting window during the period, not least because the $270-billion economy continues to enjoy more than ample liquidity that any lender can tap because the industry finds it hard to deploy what financial assets they have thus far accumulated.
The central bank reported total availments of thrift and rural banks from the rediscounting window of only P1.017 billion in the first nine months. This was 94.1 percent lower than rediscounts totaling P17.32 billion in the same period last year.
According to the BSP, the large regular commercial, as well as universal lenders, completely ignored the rediscounting window during the period.
The peso-rediscounting window is put up by the BSP to assist banks with their liquidity requirements.
This is done by allowing qualified banks to get loans or advances from the BSP using eligible papers of its borrowers as collateral.
The lower volume of avail-ment from banks indicates a relative lack of demand for quick liquidity, as lenders have enough of their own to address operational requirements.
Of all the availment during the period, 77 percent went to commercial credits, 6 percent to agricultural and industrial credits, 6 percent were channeled to permanent working capital and, 5.6 percent for capital expenditure, 1.3 percent for housing and 4.3 percent for other services.
Meanwhile, availment under that Exporters Dollar and Yen Rediscount Facility (EDTRF) also declined by about 92.7 percent in January this year.
In particular, availment amounted to $6.9 million in January this year and benefited two exporters. This was significantly lower compared to the $95-million grants for the same period last year.
There was no yen-denominated availment under the EDYRF during the nine-month period.