KUALA LUMPUR: Bank Negara Malaysia (BNM) will reduce the statutory reserve requirement (SRR) for banking institutions to 2% from 3%, effective March 20.
Additionally, the central bank said each principal dealer will be able to recognise Malaysian Government Securities (MGS) and Malaysian Government Investment Issues (MGII) of up to RM1 bil as part of the SRR compliance.
“This flexibility for principal dealers is available until March 31. These combined measures will release approximately RM30 bil worth of liquidity into the banking system,” it said in a statement today.
The SRR is an instrument to manage liquidity and is not a signal on the stance of monetary policy. The Overnight Policy Rate (OPR) is the sole indicator used to signal the stance of monetary policy, and is announced through the monetary policy statement released after a Monetary Policy Committee meeting. – March 19, 2020, Bernama
