BSP, bank execs mull 3rd TDF tenor

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Bangko Sentral ng Pilipinas headquarters in Manila. (Reuters file photo)

MANILA – Regulators and bank officials are currently in talks over the possibility of introducing a third Term Deposit Facility (TDF) tenor.

This as the 28-day facility remains undersubscribed, especially ahead of the Christmas season, which made the central bank stop offering it for auction.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said central bank officials understand why banks offered less bids for the longer-term TDF.

“We know that banks have alternative use for their money instead of just putting their (funds) with the BSP,” he said.

The central bank executive said banks needed the money to service their clients’ higher liquidity needs during the holidays.

He, however, stressed that this situation “does not prevent us from considering other tenors”.

Aside from the 28-day facility, the TDF also has a seven-day tenor.

Guinigundo said bank officials had suggested a third tenor “probably between seven and 28 days”.

“Whatever that is, it is something subject to discussion between the BSP and the banks,” he added.

Operations of the TDF facility began in June 2016 as a central bank measure to provide banks another option for their excess liquidity.

BSP officials said they were satisfied with how the TDF had been serving its purpose.