Loan limit without security to be increased

Central bank Maldives Monetary Authority (MMA) has made the decision to increase the limit of loans issued to the public without a security.

Speaking at the Finance Forum orgnanised by Pension Office and held at Bandos Island Resort yesterday, Governor of MMA Dr Fazeel Najeeb said that according to the banking regulation enforced in 2010, a loan can be issued to a single party without collateral security only up to 15 percent of a bank’s capital. Any amount exceeding this obligates a security.

Dr Fazeel noted the importance of a bank having the freedom to issue loans, as it would increase the bank’s capital.

“The Board of Directors of MMA believes that it might be beneficial to propose a revision to the Parliament as soon as possible, to increase the single borrower limit mentioned in the Banking Act. We have to propose this to the Attorney General, which we will quite soon. The decision has been made to implement this policy,” Dr Fazeel said.

He further said that the draft of the monetary regulation has been completed, and that it will be enforced within two months or so. The purpose of this regulation would be to strengthen the administrative mechanism under which foreign currency is traded in the Maldives. He added that advice was sought from several experts for drafting this regulation.

Referring to dollar-related issues, Dr Fazeel said that despite how difficult it is, government expenditure must be reduced, and that this problem must be resolved internally.

“If we can’t do this, the only option is to borrow a large sum of money from another country. But considering the economic situation of the world, this is also not possible. So we have to bear with these difficult times, and take the necessary action,” Dr Fazeel said.