Amendments to the Rules and Regulations on the Reserves Against Deposits and Deposit Substitute Liabilities of Banks

BANGKO SENTRAL NG PILIPINAS OFFICE OFTHE COVERNOR CIRCULAR NO. II-q Series of 2c23 Subject: Amendments to the Rules and Regulations on the Reserves Against Deposits and Deposit substitute Liabilities of Banks The Monetary Board, in its Resolution No.777 dated 16 June 2023, approved the following amendments to the Manual of Regulations for Banks (MORB)on the rules and regulations governing the reserves against deposit and deposit substitute liabilities of banks. Section l. Section 251 of the MORB on Required reserues against deposit and deposit substitute liabilities, as amended by Circular Nos. 1154 dated 14 September 2022 and'f'175 dated 23 June 2023, is hereby further amended to read, as follows: 251 ACCOUNTS SUBJECTTO RESERVES; AMOUNTS REQUIRED The following rules and regulations shall govern the reserues against deposit and deposit su bstitute I iabilities. Pequired reserues against deposit and deposit substitute liabilities. The rates of required reserves against deposit and deposit substitute liabilities in local currency of banks effective reserve week 30 June 2023 shall be as follows: Digital RBs/Coop Reseruable Liabilities UBsIXBs TBs Banks Banks xxx XXX xxx xxx xxx i. Peso deposits lodged under Due to 9.5%o 6Vo NA NA foreign banks j. Peso deposits lodged under Due to 9.5o/o 6Vo NA NA Head Office/Branches/Agencies Abroad (Philippine branch of a foreign bank) xxx xxx xxx xxx xxx xxx Section 2. Section 252 of the MORB on Allowable modes of alternative compliance, as amended by Circular No. ll55 dated 2l September 2022, is hereby further amended to read, as follows: 252 COMPOSITION OF RESERVES xxx Allowable modes of alternative compliance. The following alternative modes of compliance with the required reserves against deposit and deposit substitute liabilities shall be allowed: a. Peso-denominated loans that are granted to micro-, small-, and medium enterprises (MSMEs), as defined under Sec. 332 (Definition of Terms),

excluding banks and NBQBs that meet the definition of a small- and medium-enterprise, subject to the following conditions: XXX The use of MSME loans as allowable alternative compliance with the reserue requirement shall be available to banks from24 April 2O2O to 30 June 2023. In the case of TBs, RBs, and Coop banks, the outstanding MSME loans of these banks that are utilized as alternative compliance with the reserve requirement as of 30 June 2023 shall remain eligible for such purpose until said loans are fully paid but not later than 51 December 2O25t Provided, however, that such MSME loans which subsequently become past due or non-performing, as defined under Sec. 3O4, or are extended, renewed, or restructured, shall no longer be eligible as alternative compliance with the reserve requirement. The outstanding balance of MSME loans that are utilized by these banks as compliance with the required reserves as of 50 June 2023 shall not be increased but may be reduced and once reduced, said loans shall not be increased thereafter. New MSME loans granted after 30 June 20.23 by banks shall not be eligible as alternative compliance with the reserve requirement under this Section. b. Peso-denominated loans that are granted to large enterprises, excluding banks and NBQBs that meet the definition of a large enterprise, subject to the fol lowi ng conditions: xxx The use of loans to a large enterprise as allowable alternative compliance with the reserve requirements shall be available to banks from 29 May 2O2O to 30 June 2023. In the case of TBs, RBs, and Coop banks, the outstanding loans to a large enterprise of these banks that are utilized as alternative compliance with the reserue requirement as of 3O June 2O23 shall remain eligible for such purpose until said loans are fully paid but not later than 3I December 2025: Provided, however, that such loans to a large enterprise which subsequently become past due or non-performing, as defined under Sec.3O4, or are extended, renewed, or restructured, shall no longer be eligible as alternative compliance with the reserve requirement. The outstanding balance of loans to a large enterprise that are utilized by these banks as compliance with the required reserves as of 30 June 2023 shall not be increased but may be reduced and once reduced, said loans shall not be increased thereafter. New loans to a large enterprise granted after 3O June 2023 by banks shall not be eligible as alternative compliance with the reserve requirement under this Section. xxx Section 3. This Circular shall take effect on 30 June2C.23 after its publication either in the Official Gazette or in a newspaper of general circulation. FOR THE MONETARY BOARD: fr"* rua 1 FETIPE M. MEDALLA Governor 09 June2o23 Page2of2