Some banks may be overly conservative in their small business lending because of concerns that they will be subject to criticism from their examiners. While prudence is warranted in all bank lending, especially in an uncertain economic environment, some potentially profitable loans to creditworthy small businesses may have been lost because of these concerns, particularly on the part of small banks.
What is more, the NBU will allow the banks to use benchmark domestic government debt securities to meet up to 50% of their total required reserve ratios, with a view to decreasing the risk of the NBU having to return to the monetary financing of the budget deficit in 2023.