COVID 19- Actions by Maldives’ Central Bank
Saturday 21st of March 2020
COVID 19- Actions by Maldives’ Central Bank
Maldives Monetary Authority (MMA), the country's central bank, has announced that certain measures will be implemented as a response to the economic downturn resulting from coronavirus. It was revealed that the MMA has been holding discussions with other banks in the country.
Banks have been instructed to offer a six-month grace period for all those who have existing loans. A grace period allows a borrower to delay payment for a short period of time beyond the due date. During this period, no late fees are charged, and the delay cannot result in default or cancellation of the loan or contract.
The central bank's minimum reserve requirement has been reduced to 5% in order to offer liquidity to the banks. This allows banks to lend more to customers and businesses, providing them financial assistance as they continue to be adversely affected by the pandemic.
The bank will also be arranging for loan facilities in the scenario where financial institutions require liquidity. Lending facilities usually come in the form of term securities lending facilities, treasury automated auction processing systems, or the overnight lending market.
Moreover, MMA will be increasing the circulation of dollars in the foreign exchange market via resources available to the central bank in order to maintain the currency exchange rate. The currency exchange rate, which used to be USD 1 against MVR 15.41, is currently at MVR 15.41. Maldives operates a managed exchange rate system.
Other measures include acquiring USD150 million via the currency swap agreement between the Maldives' government and the Reserve Bank of India and requesting assistance from the International Monetary Fund (IMF) through the state.
Additionally, uninterrupted banking and payment system services will be available during the public holidays as well, which has been declared from March 19th to the 26th. The central bank will be providing their banking and payment system services on the 19th، 23rd and the 26th and customers will also be able to withdraw cash.