The Bangko Sentral ng Pilipinas (BSP) has imposed a ceiling on the amount of loans to enterprises that banks can extend as an alternative compliance with their reserve
requirements.
In a statement on Friday, the central bank announced that its policymaking Monetary Board put the cap on financial institutions’ aggregate loans to micro, small and medium enterprises (MSMEs) under this relief measure at P300 billion and to large enterprises (LEs) at P435 billion.
BSP Governor Benjamin Diokno said these limits were calibrated based on different simulations and aimed to ensure that providing such loans as an alternative mode of compliance was in line with domestic liquidity conditions and projected growth.
Citing preliminary data, Bangko Sentral said the average amount of these MSME and LE loans for the reserve week ending November 23 were P123.6 billion and P29.5 billion, respectively.
Existing guidelines allow the BSP-supervised financial institutions (BSFIs) to use such loans until Dec. 29, 2022. This is subject to early closure, if warranted and with prior notice.
The Bangko Sentral created this policy to help enterprises cope with the impact of the coronavirus disease 2019 pandemic, which led the government to impose community quarantines of varying strictness to contain its spread. These forced most people to stay at home to avoid infection and most businesses to suspend operations, if not stop for good.
“Once the set limits are reached prior to the deadline, the BSP will proceed to amend [the] existing policy by closing the eligibility window on the use of the relief measure,” the central bank said.
“BSFIs are encouraged to continue to avail [themselves] 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 said.
Earlier, he said the Bangko Sentral supported the passage of the proposed GFIs (Government Financial Institutions) Unified Initiatives to Distressed Enterprises for Economic Recovery Act (Guide).
This bill proposes measures to strengthen the capacity of government financial institutions to provide financing to MSMEs and other strategically important companies.
The Senate and the House of Representatives have their own versions of the measure, which remain pending.