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BSP to issue new rules on PDIC loans |
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By Donnabelle L. Gatdula
The Philippine Star 08/29/2005 The Bangko Sentral ng Pilipinas (BSP) is expected to come up with a new circular that would embody consolidated rules on Philippine Deposit Insurance Corp. (PDIC) loans. BSP sources said this is part of the comprehensive review of the monetary authority’s overall credit policy stance. "This will allow us to create a credit policy environment that is consistent with our prime objective of maintaining price stability," the sources said. The review, the sources said, will also enable the BSP to determine the amount that is being released to the financial system through the PDIC. "We have to make sure that it (the loans being given by the BSP to rehabilitate ailing banks) will not create inflationary pressures," the sources said. "A prolonged period of price increases creates the risk that the public will come to believe that inflation will continue to remain high for the foreseeable future and continue to exceed the government’s inflation target," a BSP inflation report said. The sources said the move to review its credit policy stance is also necessary to strengthen the existing rules on giving out loans. "We want to make our policy clear and that all the gray areas are covered," the BSP sources said. At present, the BSP provides emergency loans (of up to 50 percent of the bank’s liabilities) to banks that are suffering from liquidity problems. It also extends financial assistance to PDIC when the latter rehabilitates an ailing bank. Sources said the new circular may also contain possible refinements in the peso-dollar rediscounting facility of the BSP. "We may come out with an omnibus circular that will carry all the guidelines on credit policy. All of these are geared toward a coordinated effort to keep prices stable. We have to keep a balance between releasing loans and inflation rates," the sources stressed. |
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