BML financially strong despite challenges: MMA

Central bank Maldives Monetary Authority (MMA) has issued a statement today saying that although there are challenges in managing Bank of Maldives (BML)'s card transactions, the bank remains in a strong financial position

MMA said that although BML reduced its foreign transaction limit on its debit and credit cards today, the bank was advised to reverse the decision as it was not a favourable change for individuals and businesses.

They said that meetings were held with BML on multiple occasions to identify the challenges faced in managing overseas transactions with BML cards, and highlighted that BML noted a significant increase in the number of card transactions in foreign currencies, in connection to the Covid-19 pandemic.

The statement further detailed that surplus liquidity of the Maldivian Rufiyaa in the country’s banking system has increased due to the previous government printing money to manage cash flow during the pandemic. By the end of July this year, surplus liquidity in the banking system averaged MVR 6.7 billion.

MMA revealed that BML accounts for the bulk of these funds, adding that it was identified that banks disbursed most of the surplus liquidity in the form of personal loans. By the end of June this year, the volume of personal loans disbursed through the banking system reached MVR 6.6 billion, compared to MVR 2.9 billion at the end of 2019.

MMA said this is one of the reasons why card transactions spiked up during this period.

MMA further noted that the amount of dollars issued by banks has been increasing each year. By the end of 2022, USD 267 million was sold to banks, a figure that rose to USD 307 million by the end of 2023. The trend has continued this year, with the majority of dollars being issued to BML, according to the central bank.

MMA stated that it will prioritize banks that consider such issues affecting the public when determining the proportion of dollars allocated to them in the future.