BSP slashes banks' reserve requirements | ABS-CBN

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BSP slashes banks' reserve requirements

BSP slashes banks' reserve requirements

Arthur Fuentes,

ABS-CBN News

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MANILA -- The Bangko Sentral ng Pilipinas on Friday said it will cut the amount of deposits banks need to hold as cash, thus freeing more money for loans.

The BSP said it will reduce the reserve requirement ratios (RRRs) by 200 basis points for universal and commercial banks and non-bank financial institutions with quasi-banking functions (NBQBs). For digital banks, the RRR will be cut by 150 bps, and for thrift banks, it will be cut by 100 bps.

This will bring the RRRs of universal and commercial banks as well as NBQBs to 5 percent; digital banks to 2.5 percent; and thrift banks to zero percent, the BSP said.

This is expected to give a further boost to bank lending even as the BSP kept interest rates steady in its last meeting, despite expectations of a rate cut.

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The new ratios will take effect beginning March 28 March, and will apply to the local currency deposits and deposit substitute liabilities of banks and NBQBs, the central bank said.

BSP Governor Eli Remolona has said that the Philippines' reserve requirements for banks were among the highest in the region.

This move follows the BSP's decision to put rates on hold during its last policy-setting meeting. Remolona said concerns about heightened uncertainty in the world economy made the Monetary Board choose to keep rates steady instead of slashing them amid easing inflation.

Remolona however also said another rate adjustment was "on the table" in the MB's next meeting in April.

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