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BSP Reduces Reserve Requirements Effective 30 June 2023

On 23 June 2023, the Bangko Sentral ng Pilipinas (“BSP”) issued BSP Circular No. 1175, Series of 2023 (the “Circular”), informing the public that the Monetary Board, in its Resolution No. 727 dated 08 June 2023, approved the reduction in the reserve requirement (“RR”) ratios of deposit and deposit substitute liabilities of banks and non-bank financial institutions with quasi-banking functions. 

The Circular amended Section 251 of the Manual of Regulations for Banks, as amended by BSP Circular No. 1154 dated 14 September 2022, on the required reserves against deposit and deposit substitute liabilities. The Circular lowered the RR of universal banks (“UBs”) and commercial banks (“KBs”) from 12% to 9.5%, digital banks from 8.0% to 6.0%, thrift banks from 3.0% to 2.0%, and rural and cooperative banks from 2.0% to 1.0%. Thus:

251 ACCOUNTS SUBJECT TO RESERVES; AMOUNTS REQUIRED

The following rules and regulations shall govern the reserves against deposit and deposit substitute liabilities.
Required reserves against deposit and deposit substitute liabilities. The rates of required reserves against deposit and deposit substitute liabilities in local currency of banks effective reserve week 30 June 2023 shall be, as follows:

Reservable Liabilities

UBs/KBs

Digital Banks

TBs

RBs/Coop Banks

a. Demand Deposits

9.5%

6%

2%

1%

b. NOW accounts

9.5%

6%

2%

1%

c. Savings Deposits (excluding basic deposit accounts)

9.5%

6%

2%

1%

d. Time Deposits, Negotiable CTDs, Long-Term Non-Negotiable Tax Exempt CTDs

9.5%

6%

2%

1%

e. xxx

xxx

xxx

xxx

xxx

f. Deposit Substitutes (DS)

9.5%

6%

2%

NA

xxx

xxx

xxx

xxx

xxx

The Circular also amended Section 211-Q of the Manual of Regulations for Non-Bank Financial Institutions on reserves against deposit substitutes which reduced the reserves from 12.0% to 9.5%.