MMA Clarifies Information on Bank Licensing System

In response to false news circulating in the media, the Maldives Monetary Authority (MMA), the central bank of Maldives, has today issued a statement clarifying information for the public regarding the system used by the Authority in issuing licenses to banks, and assuring the integrity of this system.

The MMA stated that news is being spread in a manner that misleads the public and compromises the integrity of the system regarding the procedures followed by the Authority in issuing banking licenses.

According to the MMA, under Law No. 24/2010 (Maldives Banking Act), the process of issuing a license to operate a bank follows three stages. The first stage involves providing information on the requirements to be fulfilled by the party wishing to obtain a license. The second stage is the evaluation of the application submitted for the license. The final stage is the issuance of the license.

The MMA said that in evaluating the application for a license, the main aspects considered by the MMA include the financial capability of the applicant, the source of capital, the fit and proper status of shareholders and senior management, and the submitted business plan.

At this stage, the application is first evaluated by the MMA's Licensing Section. After this section evaluates the application, it is submitted along with the section's recommendation to the "Advisory Committee on Financial Institution Licensing" of the MMA. After this committee evaluates the application, it is submitted to the Governor with the committee's recommendation. The Governor then presents it to the MMA Board, which makes the final decision regarding the issuance of the license, as stated in the announcement.

If the MMA Board decides to grant the license, the applicant is first issued a "conditional" approval. The purpose of this is to provide a period for completing certain tasks such as company registration, establishing IT infrastructure, and operationalizing the premises. If all requirements for bank operation are completed within this period, the Authority will assess the institution and issue an operational license.

The MMA states that even if the Board decides not to approve an application for a banking license under the aforementioned process, there is no "cooling off period" mandated by law before reapplying for a license. Thus, the opportunity to reapply for a license remains open. In such cases, when a new application is submitted, the entire evaluation process will be conducted again, treating it as a new application. A license will only be issued after all evaluation stages are completed, and the Board determines that all necessary requirements in the application have been met and decides to grant the license, as stated by the MMA in the announcement.

In this statement, the MMA has assured that maintaining a robust financial sector and establishing integrity at all levels of this sector are always among the Authority's top priorities. The MMA stated that it will only issue a license to a financial institution to operate in the Maldives once all legal requirements have been fulfilled.