MANILA -- The Bangko Sentral ng Pilipinas’ (BSP) on Thursday announced another 100-basis points reduction in the reserve requirement ratio (RRR) of universal and commercial banks (U/KBs), thrift banks (TBs), and non-bank financial institutions with quasi-banking functions (NBQBs) effective Dec. 2, 2019.
These brought U/KBs’ RRR to 14 percent, TBs to 2 percent and NBQBs to 14 percent.
To date, the central bank has slashed U/KBs’ and TBs’ RRR by a total of 400 basis points and NBQBs by 300 basis points.
In a statement, the central bank said these cuts are “in line with the BSP’s broad financial sector reform agenda to promote a more efficient financial system by lowering financial intermediation costs.”
“At the same time, the adjustments in reserve requirements ratios are aimed to ensure sufficient domestic liquidity in support of economic activity,” it added.
Asked why the central bank’s policy-making Monetary Board (MB) excluded RBs in the latest RRR cut, BSP Governor Benjamin Diokno said the Board considers RBs’ 3 percent RRR level as “the appropriate level.”
“For prudential reason, further cut is deemed not prudent,” he said in a reply to a Viber message from the Philippine News Agency (PNA).
To date, the MB has slashed RBs’ RRR by a total of 200 basis points --100 basis points each last May and last September.
Reserve requirement of cooperative banks was cut by 100 basis points last May.
These cuts are meant to make Philippine banks’ RRR level at par with their counterparts in the region. (PNA)
