Apr. 7--BSP data showed SDAs grew by P20.3 billion to P401.6 billion last year from P381.3 billion in 2007.

The SDAs have been increasing since the BSP implemented liquidity management measures allowing trust entities to make placements in the facility.

This measure encourages Government Service Insurance System (GSIS), Social Security System (SSS) and other government-owned and -controlled corporations (GOCC) to deposit funds with the BSP.

The BSP is expected to further amend the SDA rule by opening a shorter tenor to free up more liquidity into the local financial system. This is besides implementing another cut in its interest rates.

Its overnight borrowing and lending rates stood at 4.75 percent and 6.75 percent, respectively.

In March last year, the BSP refined its SDA by closing the two-, three- and six-month windows to ensure that banks' loanable funds remain adequate to meet the requirements of an expanding economy. A global financial crisis, however, has since taken the steam out of domestic economic expansion.

On November 14 last year, the BSP implemented a two percentage reduction in the regular reserve requirement on bank deposits and deposit substitutes. This was estimated to free up about P60 billion of cash into the local financial system.

Ed Francisco, BDO Capital Corp. president, said the BSP should lower its interest rates some more for the SDA to encourage banks to lend more to the public and support economic growth.

He said most of the banks are putting their money in the SDA instead of lending to the public.

"There is much [need for capital] in the Philippines [for] private sector funding," he said.

Loans extended by commercial banks, net of their overnight placements with the central bank grew at a slower pace of 22.6 percent last February from the 24.5-percent expansion in January.

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