THE CENTRAL BANK is giving additional regulatory to financial institutions, including the imposition of a higher single borrower’s limit (SBL), removing penalties for reserve deficiencies, and providing leeway for some notification requirements amid disruptions caused by the coronavirus disease 2019 (COVID-19).

“The measures ease certain BSP (Bangko Sentral ng Pilipinas) regulatory requirements governing banking operations for the duration of the enhanced community quarantine and one month thereafter,” BSP Deputy Governor Chuchi G. Fonacier said in a memorandum signed on March 19.

“The period of eligibility may be extended depending on the developments related to the COVID-19 situation,” she added.

First of the measures is the hike in big banks’ SBL to 30% from 25% for a period of six months. The SBL helps banks manage their exposure to borrowers.

The BSP will also relax maximum penalty impositions for reserve deficiencies.

According to Ms. Fonacier, the maximum penalty the BSP can impose will be the rate on the overnight lending facility, which is currently at 3.75%, plus 50 basis points.

Banks can be exempt from the maximum penalty “provided that the maximum reserve deficiency of the BSP-supervised financial institution (BSFI) shall be 200 basis points above the reserve requirement.”

The reserve requirement ratio (RRR) of universal and commercial banks is at 14% and four percent and three percent for thrift and rural lenders, respectively.

Ms. Fonacier said they will also give banks some leeway in their notification requirements, such as in letting BSP know of a change in their banking hours and the temporary closure of some of their units in light of the Luzon-wide enhanced community quarantine (ECQ).

“A bank need not to inform the BSP of changes in its banking hours, as required under Section 108 of the Manual of Regulation for Banks, during the ECQ period,” Ms. Fonacier said.

However, BSFIs will be required to submit consolidated reports on the temporary closure of their bank branches on or before June 30.

The BSP will likewise postpone the deadline for required reports from BSFIs that have deadlines from March to May, except for the Financial Reporting Package for Banks, the Consolidated Foreign Exchange Position Report, as well as event-driven report requirements and reserve requirement-related reports.

Moreover, lenders will also be given a grace period to comply with BSP supervisory requirements with deadlines prior to March 8. These reports can be submitted until end-June.

Sought for comment, Rizal Commercial banking Corp. Chief Economist Michael L. Ricafort said the said relief measures will help banks during this period.

“These regulatory relief measures specifically the higher SBL and relaxed maximum penalty for reserve deficiencies will effectively give banks greater leeway to further increase lending to different borrowers such as businesses, consumers, and other institutions,” Mr. Ricafort said in an email. — L.W.T. Noble