BSP eyes removal of fees for small-value fund transfers
The Bangko Sentral ng Pilipinas (BSP) over the weekend said it is looking at ways to remove fees on small-value fund transfers, including reducing the reserve requirement of local lenders.
According to BSP Governor Felipe Medalla, the central bank is ready to work with the banking industry to incentivize more Filipinos to use digital payments.
In a post on his official Twitter account, Medalla cited that a P15 fee—charged by a number of banks for interbank transfers—for a P200 transaction would be “quite large” relative to the amount being sent.
The @BangkoSentral is ready to work with the industry to find ways to eliminate fees on small-value fund transfers and incentivize more Filipinos to use #digitalpayments. If the fee is P15 for a P200 transaction, then the fee is quite large relative to the amount being sent.— Felipe M. Medalla (@BSPGovMedalla) February 25, 2023
“We are ready to collaborate with banks and payment system operators to explore a cost-sharing system that excludes small transactions from these types of fees,” he said.
“We may even consider cutting the reserve requirement to enable banks to make these concessions. All these, in pursuit of a financial system that leaves no one behind,” he added.
The reserve requirement is the amount of cash a bank must hold in its reserve against deposits made by customers in the Philippines. It is currently at 12%, said to be among the highest in the region.
Medalla last year said the reserve requirement ratio (RRR) of big banks could still be cut down to a single digit by the end of his term in July, should inflation be expected to fall within the target range by then.
“After all, the true measure of an effective policy lies not in its complexity but in its ability to bring those at the margins into the fold,” he said over the weekend.
Inflation, however, clocked in at a 14-year-high of 8.7% in January, higher than central bank’s projection range of 7.5% to 8.3%, and the target range of 2.0% to 4.0%.
It expects inflation to fall into the target range by the fourth quarter, and average 6.1% for 2023.
Medalla is currently serving the unexpired term of his predecessor, current Finance Secretary Benjamin Diokno, who also took over the rest of the term of Governor Nestor Espenilla, Jr. who passed away in February 2019.
Espenilla in 2017 said he wanted to see the reserve requirement cut by half under his leadership. — BM, GMA Integrated News