[ad_1]
The number of small business loans has risen in recent months after the central bank implemented relief measures that would encourage financial institutions to continue lending to this sector that employs nine out of 10 Filipinos.
More importantly, Bangko Sentral ng Pilipinas (BSP) Governor Benajmin Diokno said that regulators were prepared to take further steps to help the country’s business class, including further lowering the reserve requirements of banks that they would free up more cash for new loans.
“We are pleased to note that following the implementation of regulatory relief measures, banks are up to their task,” he said in a speech to foreign investors last week. “We have seen a significant increase in loans, more to micro, small and medium enterprises.”
According to the head of the central bank, average daily loans to small businesses increased 750 percent, from P9.9 billion in April 2020 to 84.2 billion in July 2020.
“This is a huge relief for small businesses,” he said.
The central bank recently decided to halt its series of monetary easing moves, which had so far released an estimated P1.3 trillion into the local financial system, to help the system digest the new liquidity.
But Diokno said he was ready to act if warranted.
“Let me be clear: the BSP is prepared to do more if warranted,” he said. “The BSP remains committed to disciplined and evidence-based monetary policymaking while pursuing its objective of price stability.”
“There is room to further reduce the reserve requirement,” he added. “The Monetary Board earlier this year gave me the authority to implement a 400 basis point cut in the reserve requirement for 2020. So far I have made a 200 basis point cut in the reserve requirement for universal and commercial banks.” .
He previously noted that even the smallest banks had gotten in on the action, with preliminary data showing rural and cooperative banks lending more money or refinancing existing loans for small businesses in compliance with the recent cut in the sector’s legal reserve requirements. .
At the end of July 2020, the central bank said 66 rural and cooperative banks lent P1.5 billion to small and medium-sized enterprises compared to P1 billion from just 39 from the same sector at the end of April.
In addition, 10 rural banks and cooperatives used new loans to finance severely affected large companies worth P100 million in fulfillment of their reserve requirements.
Diokno acknowledged concerns that the ongoing public health crisis would lead to an increase in loan defaults, but said that is not the case, according to the most recent data.
“According to our assessment, this will not be the case,” he said. “We expect any increase in non-performing loans to be modest.”
A BSP survey conducted in April of the top 20 commercial and universal banks, the top 20 savings banks, and the top 20 rural and cooperative banks showed that, on average, these banks expect their bad loans to increase 2.4% in March passed to 4.6% in December. 2020.
“This likely increase is manageable,” said the central bank chief. INQ
Read next
EDITOR’S SELECTION
MOST READ
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer and more than 70 other titles, share up to 5 gadgets, listen to the news, download from 4am and share articles on social media. Call 896 6000.
For comments, complaints or inquiries, please contact us.
[ad_2]
