BML takes U-turn on USD limit decision following backlash

The Maldives’ national bank has reversed its decision to suspend foreign transactions on cards linked to MVR accounts; a move that came within hours of implementing the changes - which met with massive public backlash.

In a statement on Sunday morning, the Bank of Maldives (BML) announced changes to its card limit for foreign transactions. The bank suspended foreign transactions for existing debit cards, as well as new debit and credit cards linked to MVR accounts. It also lowered the monthly limit for standard and gold credit cards to USD 100.

But in a second statement in the afternoon, BML said it had reversed its earlier decision based on instructions from the central bank.

“Changes to card limits for foreign transactions announced on 25th August 2024 has been reversed based on instruction from our regulator, the Maldives Monetary Authority,” reads the statement.

BML’s earlier decision met with massive backlash, especially from Maldivian students enrolled in universities overseas.

In its earlier statement, BML said it was compelled to make the changes because the card usage is much higher than foreign currency it is able to purchase – impacting the bank’s ability to provide foreign currency support to its business customers.

BML’s CEO and Managing Director Karl Stumke said that while the bank purchased approximately USD 60 million in foreign currency from customers this year, the card usage is threefold higher than that.

He said that the card usage impacts the bank’s ability to provide foreign currency support to its business customers.

“…and we have this anomaly where the bank provides 75 percent less foreign currency to the economic sector than we do for discretionary spend on cards dominated by travel and online shopping,” he said. “We have to get the mix correct and ensure we are not squandering a scarce resource.”

Stumke said that the bank has an obligation to protect its depositors and therefore cannot continue to sell more than it is able to purchase.

He acknowledged that the changes will have a significant impact on the bank’s customers, but said the bank expects it to be temporary.

“We have not taken this decision lightly but have been compelled to take action to ensure we can continue to provide the necessary support for essential economic activities,” he said.

With the reversal of the decision, the limit for foreign transactions on debit and credit cards is back to USD 250 per month, with a higher limit of USD 750 for Maldivians residing overseas.

The bank had imposed the limit on foreign transactions following a shortage in USD amid the economic downturn during the Covid-19 pandemic.

President Dr. Mohamed Muizzu, during his 2023 presidential campaign, pledged to lift the limit.

In January, President Muizzu’s administration announced that the limit would be raised from USD 750 to USD 1,200 for Maldivian students overseas. But the February deadline passed without implementing the promised change.

The BML’s decision to change its card limits for foreign transactions comes after the Privatization and Corporatization Board (PCB) sent a letter to the bank’s Deputy CEO Aishath Nooraddin – who had served at the bank for over 42 years – informing her of the decision to dismiss her from the bank’s board.

However, the dismissal of board members requires approval from the bank’s shareholders.

The BML’s board also underwent changes in January. All non-executive members of the board were dismissed, but two of them were later reappointed.

The bank rate for USD is MVR 15.42. The dollar rate in the black market rose from MVR 18.30 in the morning to over MVR 19 in the immediate aftermath of the bank’s earlier announcement.