The Bangko Sentral ng Pilipinas (BSP) clarified  only the premium paid on deposits parked at its special deposit account (SDA) was decreased and not the interest it pays banks to put money on its SDA.
For the fourth time, the BSP cut the premium on SDA to discourage banks from lending to BSP so they will lend  to the market instead, particularly small and medium businesses.
Prevailing rate on SDA as of July 12 is only 4.031 percent, down from 4.064 percent during the first week of July.
SDA are the combined money the BSP borrows from banks. Because of high interest, some banks decided to lend to BSP instead of the market which badly needs financing to expand or diversify operations.   
Since June, the BSP has already cut a total of 3.65 basis points. One hundred basis points is one percent.
“Our policy rate remains the reverse repurchase agreement (RRP).
“What was changed was only the premium paid on SDA but which is priced off the RRP rate. We have kept the policy rate steady. It’s an operational move rather than policy move,” deputy governor for monetary stability sector Diwa Guinigundo explained to the Daily Tribune.
Deposits on SDA are now at a whooping P1.3 trillion, the biggest in the history of the 19-year-old BSP.
More than 70 percent of the money are owned by the five biggest banks in the country — BdO, BPI, Metrobank, PNB and Allied. The remaining are shared by smaller universal and commercial banks.
SDA is used to be known as public sector bonds with an interest rate of three percent.
Some bankers said  because of high interests, the BSP is now competing with the market and siphons all the money in the system.
“Look at the rate at the 90 and 180-day Treasury bills, it is only around 2.3 to 2.7 interest. But there are lots of rejects. Banks don’t want to lend to national government but only to BSP because SDA has more than four percent interest,” said a treasurer of a big universal bank who declined to be named for obvious reasons.     
The source said obviously, the BSP is now competing with private business and national government and its winning in the competition because of the big difference in the interests of T-bills and SDA.
“And look at the interest of banks to deposits, its only .65 to .75 percent per annum. That is the reason why banks prefer to lend to the BSP than to give higher interest to depositors,” the treasurer added.