The Maldives Monetary Authority (MMA) has declared the Bank of Maldives (BML)’s July 2025 acquisition of the SME Development Finance Corporation (SDFC) illegal under the Banking Act. This transaction, executed without MMA approval as mandated by Sections 20(a) and 21(a), jeopardles fears for the future of micro, small, and medium enterprises (MSMEs), which form 93% of Maldivian businesses. President Mohamed Muizzu’s administration, facing a dire financial crisis, defends the sale as a step toward modernizing SME financing, but the move’s illegality and murky motives raise serious questions about governance and the survival of small businesses.
Since its inception in 2019, SDFC has been a lifeline for MSMEs, disbursing MVR 1.7 billion to 1,423 recipients through affordable, collateral-free loans at 4–9.5% interest rates. Its MVR 381 million in COVID-19 relief to 2,205 businesses bolstered sectors like local tourism and fisheries while empowering women and youth. BML’s stricter lending standards, however, threaten to choke this vital support. Social media posts on X warn of a “financial coup,” fearing that BML’s profit-driven approach could raise borrowing costs, squeezing SMEs at a time when the Maldives grapples with $440 million in foreign reserves and $1 billion in debt due by 2026.
The MMA’s finding that BML bypassed required approvals for mergers and shareholder changes exposes a flagrant disregard for regulation. The President’s Office claims the sale stemmed from a Finance Ministry proposal vetted by the cabinet, yet the absence of MMA consent suggests either gross oversight or deliberate sidestepping.
Allegations on X of political motives—such as sidelining SDFC board member Mohamed Saeed and reviewing 2019–2023 loans to target Maldivian Democratic Party (MDP) allies—intensify scrutiny. Though unverified, these claims align with former Finance Minister Ibrahim Ameer’s assertion that the MMA’s independence is compromised, casting doubt on the deal’s integrity.
Muizzu’s push to integrate SDFC into BML’s Shariah-compliant, digital-first framework aligns with his National Master Plan for Islamic Economics and Finance, aiming to streamline financing amid economic strain.Without clear MMA enforcement—reversal or fines—the acquisition risks entrenching BML’s dominance, stifling banking competition, and undermining SMEs, the economy’s backbone. Muizzu’s vision for modernization must not sacrifice small businesses. The MMA and BML must clarify their stance to restore confidence, or this misstep could deepen the Maldives’ economic woes.
