Loans qualified as RRR nears P100 billion

MANILA, Philippines — Bank loans extended to micro, small and medium enterprises (MSMEs), as well as to large enterprises, which qualify as compliance with the reserve requirements, soared close to P100 billion as the Bangko Sentral ng Pilipinas (BSP) continues to extend regulatory relief measures amid the global coronavirus pandemic.

According to the BSP, loans extended by more than 100 banks to MSMEs and large enterprises, which qualify as an alternative mode of compliance with the reserve requirement ratio (RRR), amounted to P96.5 billion as of July 23.

BSP Governor Benjamin Diokno said the rising amount indicates that banks have continued to grant new loans or re-finance existing ones to MSMEs and large enterprises even through the quarantine to prevent further spread of the deadly novel coronavirus disease 2019 or COVID-19 pandemic.

“We see this contributing positively to whole-of-nation efforts to mitigate the economic impact of the health crisis,” Diokno said.

For the reserve week ending July 23, 97 banks extended loans to MSMEs as an alternative mode of compliance with the RRR with an average daily balance of P84.2 billion.

This is a substantial jump of 750.5 percent from the P9.9 billion average daily balance of MSME loans used by 55 banks immediately after the effectivity  of the measure during the reserve week ending April 30.

On the other hand, 13 banks provided loans to large enterprises as an alternative mode of compliance with the RRR amounting to P12.3 billion.

This represents a significant increase from the P376 million average daily loan balance to large enterprises which was used by 12 banks during the reserve week ending June 4.

As part of regulatory relief measures extended to banks, the Monetary Board allowed banks to use additional loans to MSMEs, as well as large enterprises severely affected by the pandemic, as alternative compliance to the RRR until the end of 2022 instead of end of 2021.

The extension gave banks and quasi-banks more time to study the risks of extending loans to MSMEs and large enterprises severely affected by the COVID-19 pandemic.

Aside from lowering the RRR, other COVID-19 measures implemented by the BSP, including the 175 basis points interest rate cuts, the P300 billion repurchase agreement with the Bureau of the Treasury, the purchase of government securities in the secondary market, among others have unleashed P1.3 trillion to the financial system.