BSP cuts RRRs for major banks to 5%, nonbanks to 2.5%, thrift lenders to zero

The Bangko Sentral ng Pilipinas (BSP) announced on February 21st that it will reduce banks' reserve requirement ratios (RRRs).

The RRR for universal and commercial banks, nonbank financial institutions with quasi-banking functions, and digital banks will be lowered to 5%, 5%, and 2.5% respectively from their previous levels of 7%, 7%, and 4%.

Thrift lenders' ratio will drop to zero percent from one percent.

This reduction is expected to inject at least PHP300 billion worth of liquidity into the financial system, potentially boosting lending activities and economic growth.

The move aims to improve liquidity conditions as interest rates gradually fall, and lessen frictions that hinder financial intermediation.