The Bangko Sentral ng Pilipinas (BSP) said it will limit the loans that banks can release to micro, small and medium enterprises (MSMEs) as part of alternative compliance with the reserve requirements (RR) to P300 billion, and P425 billion for large enterprises.
As of the reserve week ending November 12, MSME loans as alternative compliance to the RR has reached P123.6 billion. Loans to large enterprises, in the meantime, totalled P29.5 billion, based on preliminary data from the BSP.
In a statement Friday, BSP Governor Benjamin E. Diokno said that the “limits are calibrated based on different simulations and are meant to ensure that the use of loans as an alternative mode of compliance is in line with domestic liquidity conditions and projected growth.”
Diokno is encouraging banks to continue to avail of the relief measure "to sustain lending and financial support to viable MSMEs and large enterprises." By providing credit to businesses, he said this will "contribute to the recovery of the domestic economy and will help secure our envisioned path of sustainable and inclusive growth.”
As part of relief measures to cope with the effects of the COVID-19 pandemic, the BSP has allowed the use of loans to MSMEs and large enterprises as alternative compliance with RR until December 29, 2022, but “subject to early closure, if warranted and with prior notice.”
After 2022, the BSP will close the eligibility window on the use of these relief measures.
This was already an extension since the original ending to the eligibility window was end-2021.
The BSP extended the relief measures to banks and non-banks to provide funding to businesses hit by the pandemic.
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 RR. The exception is an MSME loan or large enterprise loan that has been renewed or restructured.
Loans granted to MSMEs and large enterprises that are not part of conglomerate structure are counted as part of banks' compliance with the RR rule.
The BSP have other relief measures that are MSME-related such as temporarily reducing from 75 percent to 50 percent the credit risk weight of MSME loans that are current in status and assigning zero weight to MSME loans covered by guarantees from the Philippine Guarantee Corporation, Agricultural Guarantee Fund Pool, and the Agricultural Credit Policy Council.