BML suspends foreign transactions for debit cards; drops credit card limit to USD 100

The Bank of Maldives (BML) has suspended the allowance for foreign transactions for debit cards linked to MVR accounts and reduced the monthly limit for standard and gold credit cards to USD 100 - in changes the bank said it is forced to roll out in order to continue providing necessary support for essential economic activities.

The national bank announced the changes to its card limits for foreign transactions in a statement on Sunday.

“These changes are effective immediately and are in response to the escalating usage of foreign currency spend on cards and the static sale of foreign currency to the bank,” said BML.

The changes announced are as follows:

• Existing debit cards: Suspension of allowance for foreign transactions for cards linked to MVR accounts.
• New debit and credit cards: Suspension of allowance for foreign transactions for cards linked to MVR accounts.
• Existing Standard and Gold credit cards: Monthly limit for foreign transactions reduced to USD 100.

Commenting on the decision, BML’s CEO and Managing Director Karl Stumke said that the bank has been monitoring card usage over the past year.

“… and I have reiterated in numerous speeches and interviews that the bank can only sell what it has been able to purchase,” he said.

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 said that customers using their USD credit cards or debit cards linked to USD accounts are unaffected, and are free to use up to the available account balance.

The BML advised customers that have recurring international payments to have USD accounts as their debit cards’ primary account to process overseas purchases.

“Opening an account with us is simple - in just a few simple steps, customers can open a USD account instantly on Internet or Mobile Banking, without having to visit a branch, said Stumke.

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

“We do expect this to be a temporary change and we will review this from time to time and keep our customers informed of any changes,” he said.

“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.”

BML had previously allowed up to USD 250 in foreign transactions from its debit and credit cards, and up to USD 750 for Maldivians residing overseas.

The bank had imposed the limit of foreign transactions following a shortage in USD amid the economic downturn during the Covid-19 pandemic. The failure to raise the limit in the four years since had sparked criticism against the bank.

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 dollar rate in the Maldives’ black market currently stands at MVR 18.30. Analysists expect the BML’s recent decision to raise the rate higher.