Driving financial inclusion: Banks extend P236.9 billion in loans to MSMEs

Loans extended by banks to micro, small, and medium enterprises (MSMEs) as an alternative compliance with reserve requirements (RR) reached P236.9 billion by the end of April this year, marking an 11.3 percent increase from the same period last year.

According to data from the Bangko Sentral ng Pilipinas (BSP), RR-compliant MSME loans accounted for 14.1 percent of the required reserves, representing a slight increase from the previous year when MSME loans accounted for 13.6 percent of total required reserves.

The BSP has extended the deadline for RR-compliant MSME loans until June 30, 2023, as part of the pandemic relief measures, allowing banks to provide more financing to MSMEs.

This relief measure was initially implemented in April 2020 and has been renewed for the third time since then, with the latest expiration date being December 30, 2022.

The reserve requirement is the minimum amount of money that a bank must keep on hand in cash.