Do Business in Maldives

Financial and Banking

Financial and Banking System

The Maldives financial sector consists of banks, non- bank financial institutions and capital market institution. The banking sector consists of 7 commercial banks, which include 2 locally incorporated banks and 4 branches of foreign banks and 1 subsidiary of a foreign bank and an Islamic bank.

Banks currently in operation:

  • State Bank of India (SBI) - established as a foreign bank branch in 1974.
  • Habib Bank Limited (HBL) - established as a foreign bank branch in 1976.
  • Bank of Ceylon (BOC) - established as a foreign bank branch in 1981
  • Bank of Maldives Plc. (BML) - established in 1982, a public limited company with majority ownership by the Government of Maldives.
  • Hong Kong Shanghai Banking Corporation Ltd. (HSBC) - established as a foreign bank branch in 2002.
  • Mauritius Commercial Bank Maldives Pvt. Ltd. (MCB) - established as a branch of the Mauritius Commercial Bank in May 2008 and converted to a subsidiary of the Mauritius Commercial Bank in September 2010.
  • Maldives Islamic Bank Pvt Ltd. - established in March 2011, owned by Islamic Corporation for Development of the Private Sector (ICD) and the Government of Maldives.

Non-banking financial institutions in the country include players in the general insurance market, a finance leasing company, a specialized housing finance institution and money transfer businesses.

All banks and the non-bank financial institutions, except for the securities market intermediaries are licensed, regulated and supervised by the Maldives Monetary Authority. The Capital Market Development Authority (CMDA) is the regulator for the securities market in the Maldives. It has statutory powers to license securities market intermediaries including brokers, dealers, investment advisers, asset managers, custodians, credit rating agencies as well as stock exchanges and central depositories. The regulatory powers are derived under the Maldives Securities Act, 2006 and Maldives Pension Act 2009.

Maldives Monitory Authority

The Maldives Monetary Authority is the central bank of the Maldives. It was established on 1 July 1981, under the MMA Act, and the role of the MMA is as follows.

  • To issue currency, and to determine the international value of the Maldivian rufiyaa
  • To advise the government on banking and monetary matters
  • To supervise and regulate banking to promote a sound financial system
  • To promote the stability of the Maldivian currency and foster financial conditions conducive to the orderly and balanced economic development of the Maldives

Capital Market Development Authority

Capital Market Development Authority of Maldives (CMDA), the regulator overseeing the capital markets in the Maldives is responsible for regulating and developing the capital market in the Maldives. CMDA is also the regulator of Pensions Industry under the Maldives Pension Act (8/2009). It has statutory powers to license securities market intermediaries including brokers, dealers, investment advisers, as well as stock exchanges and central depositories. The CMDA was established under the Maldives Securities Act, 2006 and commenced operations on 26thJanuary 2006. The role of the CMDA is as follows:

(i) Protecting the interests of investors

(ii) Regulating and supervising the capital market

(iii) Licensing and supervising market intermediaries

(iv) Develop and maintain fair, transparent and efficient securities market

(v) Pursuing strategies that contribute to the development and growth of the capital market

(vi) Taking actions required by CMDA for the enforcement of the Maldives Pension Act

(vii) Formulating policy and advising the Government of Maldives on capital market development and regulation and supervision and investment of the Maldives retirement schemes.

Foreign-Exchange Control

Due to a foreign exchange shortage, the Maldives Monetary Authority (MMFA) started rationing foreign exchange supplied to the banking system in 2009. As a result, a parallel market has emerged with a small premium over the official peg. That premium has grown over time. This market has continued despite the loosening of the peg, which resulted in an effective 20% devaluation. The country is still experiencing severe dollar shortage. Foreign exchange restrictions are still in place; yet, letters of credit can be obtained for investors/importers having dollar accounts with the bank.