The Bangko Sentral ng Pilipinas (BSP) has introduced a new Discount Window Facility (DWF), which will allow banks to directly use government-issued securities and central bank bills to secure advances.
The DWF will function as part of BSP’s standard credit operations, allowing it to influence credit volume in the financial system.
Previously, the BSP only permitted rediscounting of loans backed by government securities. The DWF will take effect two months after the circular’s publication.
In the meantime, banks with existing rediscounting lines may continue utilizing the rediscounting of eligible credit instruments until they expire.
This facility serves as a temporary liquidity source, allowing banks to refinance loans made to clients using eligible instruments, including promissory notes and bills of exchange.
The DWF will feature new credit scoring under the Credit Information System (CRIS) and additional application procedures.
The new facility will accept unencumbered marketable debt instruments from the government, including treasury bills and bonds with maturities not exceeding 10 years from the advance date, as well as securities issued by the BSP.
The loan value can reach up to 80% of the current market value of the collateralized securities.
Interest rates for the DWF will be based on the BSP overnight lending rate plus a spread determined by the BSP.
The peso rediscounting facility rate recently decreased for maturities of 1-90 and 91-180 days.
