BML: Loans issued to everyone under established policies

The national bank, Bank of Maldives (BML), has firmly rejected allegations that the bank issued financing for some of the private contractors recently awarded government projects without approval from the bank’s board and in violation of established lending policies.

The bank is addressing allegations targeting it in connection with the government’s award of 206 infrastructure development projects to 53 private companies.

Some of these projects were awarded to companies linked to government or ruling People’s National Congress (PNC) officials.

In this regard, a project in L. Fonadhoo was awarded to a company linked by family to Parliament Speaker Abdul Raheem Abdulla. Another project was awarded to Swift Engineering Company, owned by North Thinadhoo MP Saudhulla Hilmy, another ruling party lawmaker.

This has given rise to allegations that companies linked to senior government officials are receiving financing from the bank in violation of established lending policies through these projects.

BML firmly rejected these allegations via a statement on Sunday, citing that both its board of directors and management operate with full independence, which is evident from the corporate governance frameworks and international standards upheld by the bank.

The bank detailed that its governance frameworks has been established in accordance with Maldives’ Banking Act, central bank, Maldives Monetary Authority (MMA)’s prudential regulations and international standards set forth in Basel III and IFRS 9.

BML, citing it is regularly audited by international audit firms, said these independent audits ensure the bank’s operations meet the aforesaid standards.

The bank further said that it operates in line with the board’s strategic vision, adhering to the policies, decisions, instructions, and recommendations issued by the board across various sectors.

“The loans issued by the bank in this regard adhere to the bank’s credit policies and MMA’s regulations and policies,” the bank said, adding that they assess the capability to repay loans, single borrower exposure, and group borrower exposure when issuing loans.

Moreover, the bank added that loans are issued on an underwriting basis.

BML underscored that companies awarded government projects, provided they are bank customers, may apply for loans in accordance with the bank’s established procedures.

However, the bank said its board has established criteria for issuing loans across different sectors. These criteria set forth limits on how much the bank can invest directly in government projects, lend to various parties under sovereign guarantees, provide loans to private companies based on government receivables, and extend loans to government-owned companies.

According to the bank, its loan portfolio stood at MVR 23.7 billion at the end of the third quarter of this year. New loans issued this year stand at MVR 6.5 billion.

Loans issued by the bank for various sectors as of September:

• Tourism – MVR 8.71 billion
• Private individuals – MVR 5.34 billion
• Housing and construction – MVR 5.09 billion
• Travel and communication – MVR 2.40 billion
• Businesses – MVR 1.04 billion
• Other sectors – MVR 1.11 billion

BML emphasized that the data reflect adherence to risk threshold standards in loan issuance across multiple areas.

As such, the bank urged against spreading misinformation regarding the bank which misleads the public.