MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has imposed a cap on the amount of loans to micro, small and medium enterprises (MSMEs) and to large firms used as alternative compliance with the reserve requirement ratios (RRR) to make sure there is enough liquidity in the financial system to support economic recovery.

BSP Governor Benjamin Diokno said the loan disbursements used by BSP-supervised financial institutions (BSFIs) as alternative compliance to the RRR should not exceed P300 billion for MSMEs and P425 billion for large enterprises severely affected by the pandemic.

Diokno said the limits are calibrated based on different simulations and are meant to ensure that the use of loans as an alternative mode of compliance is in line with domestic liquidity conditions and projected growth.

He said BSFIs are encouraged to continue to avail of the relief measure to sustain lending and financial support to viable MSMEs and large enterprises.

“Access to finance by these businesses will contribute to the recovery of the domestic economy and will help secure our envisioned path of sustainable and inclusive growth,” the BSP chief said.

Preliminary data as of Nov. 12 from the central bank showed the average amount of MSME loans utilized by banks as compliance with the reserve requirements stood at P123.6 billion, while loans to large firms stood at P29.5 billion.

As part of COVID-19 response measures, including the cumulative 200-basis point interest rate cuts, the BSP allowed banks until end-2022 to count loans to MSMEs and large enterprises as part of their compliance to the level of deposits they are required to keep with the central bank.

The BSP requires banks to keep a minimum amount of cash reserves with the central bank determined by the amount of deposit liabilities owed to customers.

It slashed the RRR for universal and commercial banks by 200 basis points last March 30 and for thrift as well as rural and cooperative banks by 100 basis points effective July 31 as part of measures to soften the impact of the COVID-19 pandemic on the economy.