BSP working to scrap inter-bank transaction fees

The Bangko Sentral ng Pilipinas is now working with banks to scrap interbank transaction fees, as he said the reserve requirement ratio (RRR) could be reduced to 0% during the term of BSP governor Eli Remolona Jr., the central bank chief said on Monday.

The RRR — the amount of cash a bank must hold in its reserves against deposits made by customers in the Philippines — is now at 9.0% for universal and commercial banks, among the highest in the region.

On October 25, 2024, the RRR for big banks will be reduced by 250 basis points to 7.0%. The ratio for digital banks will be reduced to 4.0%, thrift banks to 1.0%, and rural and cooperative banks to 0%.

Remolona said earlier that he wanted the RRR for big banks to be cut to 5.0%. He said this is already being discussed.

“Pinag-uusapan pa namin, pero hindi pa namin alam kung kailan. Mataas pa rin ‘yung 7.0%, eh," he told reporters in Manila City.

(We are talking about it, but we don’t know when. But we will get there. Seven percent is still too high.)

Remolona indicated that more cuts are possible within his term, which would effectively bring down the RRR to 0%.

“Medyo matagal pa siguro 'yun... Pwede," Remolona said.

(That would take a bit more time... It's possible.)

The BSP said cutting down the reserve requirement was one of the ways it could encourage banks to lower, if not remove the interbank transaction fees especially for small transactions.

“We’re talking to them about reducing transaction fees even without a reduction in the reserve requirement. Zero sana,” Remolona said.

For his part, Bank of the Philippine Islands (BPI) president and chief executive officer Jose Teodoro “TG” Limcaoco said he was okay with the draft circular that has been fielded out to local lenders, albeit with some edits.

“I cannot speak for the industry… For BPI, I’m okay with the circular. There are some refinements, there are some edits I’d like to make, some modifications, but in general the concept, okay… I think it’s on the right track,” said Limcaoco, who also sits as the president of the Bankers Association of the Philippines.

Limcaoco earlier called for the conditional reduction in the RRR of big banks, as he said this should be made for banks that would cut down their interbank transfer fees to zero. —NB, GMA Integrated News