THE BANGKO SENTRAL ng Pilipinas (BSP) will expand banks’ alternate reserve compliance to include lending to large enterprises that meet the criteria set by the central bank, according to an official, as the pandemic continues to affect many businesses.

Circular No. 1083 dated April 22 only allowed as alternative reserve requirement compliance banks’ loans to micro-, small- and medium-sized enterprises (MSMEs) in a bid to encourage lending to small businesses that have been struggling due to measures imposed to prevent the spread of the virus.

“Under the forthcoming guidelines, loans to large enterprises that are granted after March 15 will be considered eligible alternative compliance with the reserve requirements,” BSP Deputy Governor Chuchi G. Fonacier said in a text message.

Ms. Fonacier said the revised policy will be effective starting May 29 and will be applicable to banks as well as quasi-banks until Dec. 30, 2021.

“The BSP’s policy aims to channel funding to heavily-affected large enterprises as well as to ease their financial burden during the ongoing coronavirus disease 2019 (COVID-2019) pandemic,” Ms. Fonacier said.

She said only lending to large enterprises that meet all the criteria set by the BSP will qualify as alternative reserve compliance.

Loans covered by the new relief measure will be lending to an enterprise that has been “directly and adversely impacted by the COVID-2019 outbreak,” the official said.

“[S]uch that (a) its liabilities has become more than its assets, or (b) it has experienced at least a fifty percent (50%) decline in gross receipts for at least one calendar quarter; and in either instance, is generally unable to pay or perform its obligations as they fall due in the ordinary course of business, as a result of the COVID-19 outbreak,” Ms. Fonacier explained.

Lending to large firms that appropriate regulatory agencies assessed to be badly hit by the pandemic will also qualify as alternative reserve compliance.

Ms. Fonacier said the new rules will cover credit to large enterprises that could be a proprietorship, partnership or a corporation that does not belong to a conglomerate with an asset size of more than P100 million and with 200 employees or more.

BSP Governor Benjamin E. Diokno on Friday said the central bank is also considering allowing credit granted to some educational institutions to be part of lenders’ reserve requirement compliance.

The reserve requirement ratio (RRR) of universal and commercial banks was reduced by 200 basis points in April to 12% in a move to boost liquidity during the crisis. Meanwhile, the RRR of thrift and rural banks stand at four percent and three percent, respectively.

The central bank also reduced the minimum liquidity ratio of stand-alone thrift and rural banks by 400 bps to 16% until end-2020 to support smaller lenders during this crisis. — L.W.T. Noble