To sustain economic growth, the Bangko Sentral ng Pilipinas (BSP) has reduced the reserve requirement ratios (RRRs) for universal and commercial banks from seven percent to five percent, freeing up more cash in the financial system.

Non-bank and quasi-banks (NBQBs) will also see a lower RRR of 5 percent. Additionally, the BSP has lowered the RRRs for digital banks to 2.5 percent and for thrift banks to 0 percent.

A lower RRR allows banks to lend more of their funds, boosting financial activity.

The new RRRs will take effect on 8 March 2025, and will apply to local currency deposits and deposit substitute liabilities of banks and NBQBs.

“The BSP reiterates its long-term goal of enabling banks to channel their funds more effectively toward productive loans and investments. Reducing RRRs will lessen frictions that hinder financial intermediation,” the BSP said in a statement on Friday.