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March 05, 2024

Philippine banks extend P263.1 Billion in MSME loans for reserve compliance

Banks in the Philippines disbursed loans amounting to P263.1 billion to micro, small, and medium enterprises (MSMEs) as an alternative compliance with reserve requirements by December 2022, accounting for approximately 15.9% of the total required reserves, according to the Bangko Sentral ng Pilipinas (BSP).

The amount of MSME loans was significantly higher than the reported P8.7 billion in April 2020, as stated in the BSP’s Philippine Financial System report.

Universal and commercial banks contributed P390.9 billion to MSME loans, followed by rural and cooperative banks with P52.7 billion.

The BSP is considering reducing banks’ reserve requirement ratio (RRR) by the end of June to mitigate the impact of the relief measures’ expiration.

The central bank aims to lower the RRR for big banks to single-digit levels by the end of the year, as part of its transition to market-based instruments for liquidity management.