Benjamin Diokno, governor of the Bangko Sentral ng Pilipinas (BSP), announced on Tuesday / July 21, 2020 a 100-basis-point reduction in the reserve requirements of thrift banks (TBs) and rural and cooperative banks (RCBs) effective July 31, 2020.
The reduction is expected to increase lending capacity of these banks to support financing requirements of their micro-, small-, and medium enterprises as well as rural community-based clients, the BSP said.
Reserve requirements are the amount of cash that banks must hold in reserve to ensure their capability to meet liabilities.
The reduction will also help lower intermediation costs and ease financial strain faced by these banks’ customers.
With the reduction, the reserve requirements of TBs and RCBs will be three percent and two percent, respectively.
Earlier, the BSP Monetary Board had approved a 200-basis point reduction in the reserve requirements of universal and commercial banks and non-bank financial institutions with quasi-banking functions.
This move was also part of the BSP’s omnibus package of reforms aimed at assisting the banking public with their liquidity requirements during the Covid19 pandemic and supporting the transition toward a sustainable recovery during the post-crisis period.
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