BANKS in Baguio City are being urged to lower the interest rates on loans for micro, small and medium scale industries in a bid to fuel economic recovery.

In a resolution, Councilor Betty Lourdes Tabanda said the more money that circulates, the faster the economy will recover.

"Banking institutions should grant loans with lower interest rate to encourage the business enterprise to prosper, particularly those that were significantly affected by the slowing down of economic activity due to the lockdown, especially the micro, small and medium scale industries," she said.

The councilor said a Bangko Sentral ng Pilipinas (BSP) Circular 1082, series of 2020 approved the reduction in the reserve requirement ratios of deposit and deposit substitute liabilities of universal and commercial banks and non-bank financial institutions with quasi-banking functions.

"This is resulting in an increase excess of liability of banks which must be unleashed to fund the engine of economic recovery as banking institutions play a vital role in propelling the economy forward, through its financial capability and technical expertise," Tabanda said.

The resolution was approved during this week's regular council session.