Small-bank MSME loans counted as reserves estimated at P6.7B

SMALL BANKS lent around P6.71 billion to micro, small, and medium enterprises (MSMEs) as of November, with the loans counting as an alternative form of compliance with reserve requirements, the Bangko Sentral ng Pilipinas (BSP) said.

The BSP in a report said other segments of the industry, like rural and cooperative banks, designated P12.4 million in such loans as compliance with the reserve requirements.

“Banks’ availment of the BSP’s relief measure on the use of new or refinanced loans to MSMEs and eligible large enterprises as alternative compliance with the reserve requirements (RR) declined,” the central bank said.

“This is in view of the lapse of the temporary relief measure on alternative RR compliance, particularly for U/KBs (universal and commercial banks) effective 01 July 2023,” it said.

During the coronavirus pandemic, the central bank allowed banks to count their loans to MSMEs and pandemic-hit large enterprises as part of their compliance with reserve requirements.

The relief measure expired last year, but small lenders can still count their loans to MSMEs and LEs as alternative compliance with reserve requirements until they are fully paid, but not later than Dec. 31, 2025.

In 2022, banks lent P493.5 billion to MSMEs as alternative compliance. This was 6.6% higher than the P463.1 billion a year prior.

Universal and commercial banks extended P390.9 billion in loans to MSMEs, while rural and cooperative banks lent P52.7 billion. — Keisha B. Ta-asan