Monetary Board announces limits on loans to MSMEs, Large enterprises used as alternative compliance with reserve requirements

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​The Monetary Board (MB) has set limits in the amount of loans to micro-, small-, and medium enterprises (MSMEs) and large enterprises (LEs) that may be utilized by BSP-supervised financial institutions (BSFIs) as alternative compliance with the reserve requirements (RR).

Aggregate loans to MSMEs and LEs utilized under this relief measure should not exceed P300.0 billion and P425.0 billion, respectively.

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.

“BSFIs are encouraged to continue to avail of the relief measure to sustain lending and financial support to viable MSMEs and large enterprises. Access to finance by these businesses will contribute to the recovery of the domestic economy and will help secure our envisioned path of sustainable and inclusive growth,” Diokno added.

Based on preliminary data, the average amount of MSME loans and loans to LEs utilized by banks as compliance with the reserve requirements for the reserve week ending 12 November 2020 were P123.6 billion and P29.5 billion, respectively.

​Existing guidelines allow BSFIs to utilize loans MSMEs and LEs as alternative compliance with RR until 29 December 2022, subject to early closure, if warranted and with prior notice.

Once the set limits are reached prior to 29 December 2022, the BSP will proceed to amend existing policy by closing the eligibility window on the use of the relief measure.

(Press Release)

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