Loans to large firms RRR compliant, BSP says

The Bangko Sentral ng Pilipinas (BSP) has expanded the coverage of relief measures to include large enterprises affected by the economic fallout from the coronavirus pandemic.

BSP Deputy Governor Chuchi Fonacier said loans extended by banks after March 15 to large enterprises with an asset size of more than P100 million, excluding land, as well as a workforce of 200 or more would now be counted as part of compliance with the reserve requirement ratios (RRR).

Likewise, she said large enterprise referring to a sole proprietorship or partnership, corporation or cooperative should not belong to a conglomerate structure.

“The BSP’s guidelines allow loans granted to a broader set of enterprises that meet certain criteria. The BSP’s policy aims to channel funding to heavily affected large enterprises as well as to ease their financial burden during the pandemic,” she said.

The Monetary Board issued Circular 1083 last April 22 allowing loans granted to micro, small and medium enterprises (MSMEs) to be counted as part of the banks’ compliance with the RRR to ensure adequate liquidity and credit in the financial system.

“The coverage of Circular 1083 is already expanded to include loans to large enterprises affected by COVID-19,” Fonacier said.

She said the new policy would be effective on May 29 and would be available to banks and quasi-banks until Dec. 30 next year.

Under the forthcoming guidelines, Fonacier said large enterprises directly and adversely impacted by the contagion such that its liabilities has become more than its assets or has experienced at least a 50 percent drop in gross receipts for at least one calendar quarter would be covered.

Furthermore, loans granted to large enterprises that are generally unable to pay or perform their obligations as they fall due in the ordinary course of business as a result of the COVID-19 outbreak, or an enterprise that has been determined as such by the appropriate regulatory agencies are qualified for the relief measures.

The BSP requires banks to keep a minimum amount of cash reserves with the central bank determined by the amount of deposit liabilities owed to customers.