BSP slashes banks' reserve requirements

The Bangko Sentral ng Pilipinas (BSP) surprised markets yesterday as it announced another major reduction in the amount of deposit banks are required to keep in their vault.

- Keisha Ta-asan

In a statement, the BSP said the Monetary Board has approved the reduction in the reserve requirement ratio (RRR) of Philippine banks, effective Oct. 25.

The regulator slashed the RRR for universal and commercial banks as well as non-bank financial institutions with quasi-banking functions (NBQBs) by 250 basis points, to seven percent from the current level of 9.5 percent.

The RRR for digital banks was likewise slashed by 200 basis points to four percent from six percent.

Furthermore, the level of deposits mid-sized or thrift banks are required to keep with the BSP was lowered by 100 basis points to one percent from two percent.