BSP extends RRR compliance period
The central bank will continue to count loans to micro, small, and medium enterprises (MSMEs) as well as qualified large enterprises as part of compliance with the reserve requirements until end-2022 to extend relief measures to banks and non-banks and to provide funding to businesses hit by the pandemic. The previous cut-off period was end-December 2021.
Based on an amended circular signed by Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno in a Monetary Board meeting last week, banks and non-banks can use MSME loans as allowable reserve requirement ratio (RRR) alternative compliance from April 24 this year until December 29, 2022, while loans to large enterprises are also considered alternative compliance from May 29 this year until December 29, 2022.
The BSP made some changes to the allowable modes of alternative compliance which is now specific to peso-denominated loans granted to MSMEs and large enterprises. It also said that only loans that are current and not past due or non-performing are eligible to be considered as alternative compliance to the RRR. The exception is an MSME loan or large enterprise loan that has been renewed or restructured.
The BSP said banks and nonbanks, however, can still “utilize” past due or non-performing MSME loans or large enterprise loans as alternative compliance for 30 days from the date the loans went sour.
As part of banks and nonbanks’ relief measures to cushion the impact of the COVID-19 pandemic, the BSP issued Circular No. 1100 on October 8 which amended an earlier version, Circular No. 1083 approved last April 22.
Loans granted to MSMEs and large enterprises that are not part of conglomerate structure are counted as part of banks' compliance with the RRR rule.
Diokno said that based on BSP’s latest data, the average daily balance of bank loans to MSMEs have reached ₱106 billion as of end-August versus ₱9.9 billion end-April. This was an increase of 971 percent.
Loans to large enterprises, on the other hand, went up to ₱13.6 billion which grew by “17 times since we started monitoring from the effectivity” of a BSP memo issued last May, said Diokno.