Reserve cut delivers another P110B

The Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) reduced the banks’ deposit reserves another full percentage point lower on Thursday to 14 percent.

The cut in the reserve requirement ratio (RRR) of banks takes effect on the first reserve week in December this year, BSP Governor Benjamin Diokno said. It also delivers an estimated P110 billion into the financial system.

“The (MB) announced today the reduction in the (RRR) by 100 basis points or one percentage point for universal/commercial and thrift banks,” the BSP said.

“Further the MB complemented the move with a reduction in the (RRR) for non-bank financial institutions with quasi-banking (NBQB) functions,” it added.

With the reduction, the RRR level for universal/commercial banks now stands at 14 percent, bringing the total cut this year by 400 basis points.

Likewise, the deposit reserve for non-bank with quasi-banking functions or NBQB and thrift banks were lowered to 14 percent and 4 percent respectively, from 15 percent and 5 percent.

As for rural banks, the deposit reserve was kept at 3 percent.

“The (RRR) is in line with the BSP’s broad financial sector reform agenda to promote a more efficient financial system by lowering financial intermediation costs,” the central bank said.

“At the same time, the adjustment in (RRR) is aimed to ensure sufficient domestic liquidity in support of economic activity,” it added.

Earlier, Diokno intended fully to bring down the RRR single-digit level before the end of his term.