The Monetary Board in its regular meeting today decided to exempt thrift banks from the two recently announced rounds of increase in liquidity reserve requirement. This means that the liquidity reserve requirement for thrift banks shall be rolled back to 2% on deposit and deposit substitute liabilities and 4% on their CTF and TOFA-Others liabilities. Earlier, the liquidity reserve requirement on their deposit and deposit substitute liabilities had been raised to 4% and then 5% (to 6% and then 7% in the case of CTF and TOFA-Others) as part of the package of temporary measures to respond to heightened peso volatility.
In exempting thrift banks, the Monetary Board sought to mitigate the impact of recent monetary tightening on priority lending to small and medium enterprises and the housing sector. These are precisely the key markets that thrift banks tend to focus on.
“We would like to strongly urge the thrift banking industry especially the major thrift banks with links to commercial banks to do their share in helping our economy by continuing to actively provide credit especially to the SME and housing sectors. This is not the time to exploit regulatory opportunities for short- term gains. It is the time to serve our constituencies, “ BSP Governor Rafael B. Buenaventura emphasized.
The BSP also said that it will be closely monitoring the lending activity of thrift banks and hinted at the possibility of future regulatory action if abuses are noted. Under existing regulations all lendings by thrift banks to parent commercial banks are covered by strict DOSRI rules.