Bank loans

Bank loans extended as RRR compliance reaches 260 billion pesos

MANILA, Philippines — Bank lending to micro, small, and medium-sized enterprises (MSMEs) as well as large corporations, used as an alternative to meeting reserve requirements, reached more than 260 billion pesos as the Bangko Sentral ng Pilipinas (BSP) continues to expand regulatory relief measures as the country gradually recovers from the impact of the pandemic.

Preliminary data from the BSP showed that the Philippine banking system allocated an average of 198.9 billion pesos in loans to MSMEs to comply with the reserve requirement ratio (RRR).

The amount was equivalent to 12.8% of reserve requirements for the reserve week ending March 17.

Similarly, bank loans to large corporations used to comply with the RRR amounted to 67.4 billion pesos, or 4.3 percent of total reserve requirements for the same period.

“To ensure continued support to banking operations and key economic sectors, including MSMEs, most BSP relief measures remained in place,” the central bank said in its latest financial system trends report. Filipino.

The amounts disbursed at the beginning of December were still within the limits imposed by the regulator: 300 billion pesos for MSMEs and 425 billion pesos for large companies.

Once the set limits have been reached, the BSP may modify the existing policy by closing the eligibility window for the use of the relief measure.

The temporary measure, which allows banks to use additional loans to MSMEs and large companies severely affected by the pandemic as an alternative to meeting the RRR, has been extended until this year from the original end-2021 target date. .

The extension gives banks and quasi-banks more time to study the risks involved in granting loans to MSMEs and large companies badly affected by the crisis.

The BSP requires banks to maintain a minimum amount of cash reserves with the central bank, determined by the amount of deposits due to customers.

At the height of the COVID-19 outbreak in 2020, the BSP reduced the RRR for universal and commercial banks by 200 basis points, and for savings banks as well as rural and cooperative banks by 100 basis points. base to cushion the impact of the global health crisis on the economy.

In line with COVID response measures, the regulator has allowed banks to count loans to MSMEs and large corporations as part of their compliance at the level of deposits they are required to keep with the central bank.

BSP measures to incentivize lending to severely affected MSMEs and large enterprises have resulted in the granting of new loans or the renewal or restructuring of loans to borrowers.