BSP tightens cash access for banks to address payment delays

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) plans to expand banks’ and other eligible financial institutions’ access to short-term liquidity to ensure payments are settled without delays, especially outside regular system hours.

The central bank is seeking industry feedback on a draft memorandum to amend rules governing its Intraday Settlement Facility. The proposed changes would extend access to liquidity across longer operating hours, allowing participants to settle large-value payments on time.

READ: Groundwork for near-24/7 payments settlement in place

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Under the facility, a bank short on cash can temporarily sell eligible government securities to the BSP in exchange for funds, then repurchase them within a prescribed period.

Currently, the Intraday Settlement Facility is available free of charge during both regular and extended hours, provided the securities are repurchased on time. Otherwise, the transaction converts into an Extended Intraday Settlement Facility, which extends maturity to the next business day and carries a fee equal to the BSP’s overnight lending rate plus 600 basis points.

Under the draft, the BSP will introduce a third window—the Off-Hours Settlement Facility—allowing participants to access funds before normal operating hours. This facility will carry a fee equivalent to the BSP’s overnight lending rate.

READ: BSP tweaks settlement facility for banks

However, participants with outstanding obligations face restrictions. A bank with an Extended Intraday Settlement Facility cannot access the Intraday or Off-Hours facilities until it repurchases the securities. Similarly, those with an outstanding Off-Hours facility cannot use the Intraday window until settlement.

If a participant fails to repurchase securities under either facility within the prescribed period, it forfeits the right to reclaim those securities. /pai