BSP cuts reserve requirement for thrift, rural and cooperative banks

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno on Tuesday announced a 100-basis-point reduction in the reserve requirements of thrift banks (TBs) and rural and cooperate banks (RCBs) effective end-July.

Starting July 31, 2020, the reserve requirement — the amount of cash banks are required to hold in reserve — of TBs will be reduced to 3% and of RCBs to 2%.

"The reduction is expected to increase lending capacity of these banks to support financing requirements of their micro-, small- and medium enterprise as well as rural community-based clients," Diokno said in a statement.

"It will also help lower intermediation costs and ease financial strain faced by these banks’ customers," he added.

To recall, the BSP in March already reduced the reserve requirement ratio for all universal and commercial banks by 200 basis points.

"This move is also part of the BSP’s omnibus package of reforms aimed at assisting the banking public with their liquidity requirements during the Corona Virus Disease 2019 pandemic and supporting the transition towards a sustainable recovery during the post-crisis period," said Diokno.

To recall, the central bank in March committed to remit P20 billion to the national government in support of efforts against COVID-19.

It also purchased P300-billion worth of government securities to support government programs against the spread of COVID-19.

The BSP has also so far cut key interest rates by a total of 175 basis points this year — 25 basis points in February, and 50 basis points each in April, May, and June. —KBK, GMA News