Bangko Sentral trims small banks’ reserve requirement ratio
Credit to Author: The Manila Times| Date: Thu, 23 May 2019 10:07:55 +0000
THE central bank has trimmed small banks’ reserve requirement ratio (RRR) on Thursday, with monetary authorities ordering a total of 300-basis-points (bps) reduction on the liquidity-mopping tool.
“This morning, the Monetary Board decided to cut the RRR for thrift, savings, [rural], and cooperative banks,” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno announced in a message to reporters.
Thrift and savings banks’ reserve requirement will be reduced by a total of 200 bps to 6 percent from the current 8 percent.
An initial 100-bps reduction will take effect on May 31, followed by a 50-bps cut on June 28 and another 50-bps decrease by July 26.
Meanwhile, the RRR of rural and cooperative banks will be trimmed by 100 bps to 4 percent from the current 5 percent.
The latest action came a week after the Monetary Board decided to cut universal and commercials banks’ 18 percent reserve requirement to 16 percent.
The RRR is the proportion of current deposits that banks need to keep with the central bank against the sum they can loan out to borrowers. MAYVELIN U. CARABALLO
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