Yameen: BML’s board needs experts, not politicians

The board of Bank of Maldives (BML) needs banking experts and not politicians, says former president Abdulla Yameen Abdul Gayoom.

At a People’s National Front (PNF) rally on Monday evening, Yameen joked that the BML is at fault over the US dollar crunch “because it failed to keep the dollar rate down despite explicit instructions by President Dr. Mohamed Muizzu to get it done.”

The police announced on Monday it had opened an investigation into  

The police announced on Monday it was investigating the opposition for possibly using BML’s later-reversed decision to change card limits for foreign transactions to incite a coup and overthrow the government.

At Monday’s rally, Yameen said that statistics show the BML has large deposits of Maldivian Rufiyaa, but no US dollars.  

He said that as the BML does not generate dollar revenues, it is forced to purchase it from the central bank, Maldives Monetary Authority (MMA), to cater to the demands of Maldivian citizens.

“So, who is to blame here? The Bank of Maldives? MMA? MMA, right? So, the CP [Commissioner of Police] needs to see if this is really an issue with the Bank of Maldives,” he said.

Yameen said that the corporate governance code does not allow the president to directly influence the BML. He said that any decisions he wants to see implemented must be communicated through the bank’s board of the Finance Ministry.

He said that if a time comes when politicians are appointed to the BML’s board, it is time for the people who put their money in the bank to think.

Yameen said that while MMA is responsible for regulating banks in accordance with the laws, all internal matters must be decided by the board.

“So, it is the board members who serve the self-regulatory and self-governance functions. Those appointed to the board must be experts in the field and credible individuals. It does not need politicians,” he said.

Yameen said that the point where politicians are appointed to BML’s board is the point where people lose all faith in the bank.

He said that such a situation would be regrettable.

On Sunday morning, the BML 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 it reversed the decision within hours, a move it said was based on instructions from its regulator, MMA.

The sudden decision to change card limits for foreign transactions had created massive public backlash, especially from Maldivian students based overseas and small businesses that sell imported goods.

The situation quickly turned political, with top government officials, accusing the opposition of attempting to stage a coup.

In a press conference held at the President’s Office shortly after the BML reversed its decision, top government officials said the bank changed the card limits despite explicit instructions by President Muizzu not to make such a move.

Foreign Minister Moosa Zameer said the government and BML had several talks over the dollar crunch, but the bank acted against the government’s advice.

In a ruling People’s National Congress (PNC) rally held on Monday evening, President Muizzu himself alleged that the BML’s decision was used to stage a coup to overthrow his administration. He said the case would be investigated and those responsible punished in accordance with the constitution.

In its original statement announcing the changes to card limits, 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.

“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.