Maldives Monetary Authority (MMA) has determined that the Bank of Maldives (BML) acquired the SME Development Finance Corporation (SDFC) in violation of the country’s banking laws.
According to sources familiar with the matter, the MMA has issued a letter to relevant government authorities stating the transaction was conducted without the necessary legal approvals. The central bank has yet to publicly comment, and BML has also remained silent on the issue.
Under the Maldives Banking Act, banks are required to obtain prior approval from the MMA before any changes in ownership or mergers take place. However, the acquisition of SDFC by BML proceeded without this approval, contravening the law, the sources said.
A source told that the MMA had instructed that the transaction could only move forward once all legal procedures were properly followed.
The President’s Office said on Sunday that the decision to transfer SDFC to BML came following Cabinet-level discussions based on a proposal submitted by the state-owned bank. The statement did not address whether MMA’s consent had been obtained.
Following the acquisition, BML announced plans to convert SDFC into a Sharia-compliant business unit, operating as a subsidiary of the bank. BML pledged to disburse MVR 500 million to small and medium enterprises (SMEs) in the first year, with a target of MVR 1.9 billion over five years. Additionally, MVR 300 million has been earmarked over the next three years to support start-up ventures.
SDFC was established in 2019 under the administration of the Maldivian Democratic Party (MDP) as a specialised lender for SMEs. Since its inception, the financial institution has disbursed nearly MVR 2 billion in loans to support small business development across the country.