BSP cuts reserve requirement for thrift, savings, coop banks

ABS-CBN News

Posted at May 23 2019 04:42 PM | Updated as of May 23 2019 08:00 PM

MANILA -- The Monetary Board will cut the reserve requirement ratio or RRR for thrift, savings and cooperative banks, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Thursday.

The RRR cuts for small banks came after the BSP earlier announced a phased 200-basis point reduction in the RRR for big banks and a 25-basis point cut in the benchmark lending rate.

The RRR for thrift banks will be reduced by 100 basis points on May 31, by 50 basis points on June 28 and by another 50 basis points on July 26. This will bring the ratio to 6 percent from 8 percent, Diokno said.

For rural and cooperative banks, the RRR will be cut by 100 basis points on May 31, bringing it to 4 percent from 5 percent, he said.

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An analyst at RCBC, said the RRR cut will send P20 billion into the financial system, which could be used for housing and auto loans as well as additional lending for farmers, fishermen and small businessmen.

"With more lending to those sectors it would lead to more economic activities and hopefully lead to faster economic growth," said RCBC economics and industry research division head Michael Ricafort.