Philippine central bank cuts reserve requirement ratios

For universal and commercial banks, the RRR has been reduced to 7%.

The Bangko Sentral ng Pilipinas (BSP) has reduced the reserve requirement ratios (RRR) for financial institutions by up to 250 basis points, according to a statement on 20 September 2024.

For universal banks, commercial banks and non-bank financial institutions with quasi-banking functions, the RRR has been reduced by 250 bps, to 7%.

For digital banks, the RRR is lower by 200 bps, to 4%.

For thrift banks (TBs) and cooperative banks (RCBs), the RRR was narrowed by 100 bps, to 1% and 0%, respectively.

The new ratios shall take effect on the reserve week beginning on 25 October 2024.

It applies to local currency deposits and deposit substitute liabilities of banks and NBQBs.

The reductions are expected to lower intermediation costs and promote better pricing for financial services, the BSP said in its announcement.

“As inflation continues to track a target-consistent path over the next two years, the BSP will reassess the need for further reductions in the RRRs to better align them with regional norms over the medium term,” the central bank said.