Bank Reserve Rate Seen Reduced To 5%

The local banking industry could look forward to a lower reserves requirement ratio (RRR) of five percent than the current 9.5% for the nation’s big banks, effectively reducing the costs to banks of maintaining reserves, and at the same time, increasing funds for lending.

Photo Insert: Big banks’ RRR hit a peak of 20% in 2014, and at the time, it was the highest in the region. I Bangko Sentral ng Pilipinas

Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona said that “eventually” the RRR will be reduced to five percent, during the course of his six-year term as BSP’s seventh governor.

“(The) ideal is zero,” he told journalists in an informal press chat. In Asia, the Philippines’ RRR is considered one of the highest.

Big banks’ RRR peaked 20% in 2014, and at the time, it was the highest in the region.

Among Southeast Asian countries, the Philippines still implements the highest RRR compared to Vietnam’s 3.0%, Malaysia’s 2.0%, and Thailand’s one percent.

Outside of ASEAN, China has an RRR of 10.75%.

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