Increase in Statutory/Legal Reserve Requirements of Peso Deposit Liabilities and Deposit Substitutes

CIRCULAR NO. 726 Series of 2011

Subject :     Increase in Statutory/Legal Reserve Requirements of Peso Deposit Liabilities and Deposit Substitutes The Monetary Board, in its Resolution No. 871 dated 16 June 2011, approved the increase in the statutory/legal reserve requirements for peso deposit liabilities and deposit substitutes of universal/commercial banks, thrift banks, rural banks, cooperative banks, and non-bank financial institutions (NBFIs) with quasi-banking functions, as follows:

BANK/FINANCIAL INSTITUTION

ACCOUNTS

STATUTORY/LEGAL RESERVES

LIQUIDITY RESERVES

From

To

Universal/Commercial Banks

-Demand -"NOW" -Savings -Time -Deposit substitutes (DS)

8%

9%

11%

-DS evidenced by repo agreements1/ -Long-term Negotiable Certificate of Time Deposits (LTNCTDs)

2%

3%

0%

Thrift Banks

-Demand -"NOW" -Savings -Time -Deposit substitutes

4%

5%

2%

-DS evidenced by repo agreements1/ -LTNCTDs

2%

3%

0%

Rural Banks/Cooperative Banks

-Demand -"NOW"

4%

5%

0%

-Savings -Time

1%

2%

-LTNCTDs

2%

3%

NBFIs with quasi-banking functions

-Deposit substitutes

8%

9%

11%

-DS evidenced by repo agreements 1/

2%

3%

0%

1/ Refer to deposit substitutes evidenced by repo agreements covering government securities up to the amount equivalent to the adjusted Tier 1 capital of the bank/quasi-bank and which comply with the conditions provided under Subsection X253.1/ 4253Q of the Manual of Regulations for Banks/Manual of Regulations for Non-Bank Financial Institutions

These new reserve requirement ratios shall take effect on the reserve week beginning on   24 June 2011.

FOR THE MONETARY BOARD:

NESTOR A. ESPENILLA, JR. Officer-In-Charge