The Bank of Maldives (BML) faces an immense risk by issuing loans in huge amounts to cover government expenditure, former President Abdulla Yameen has warned.
Speaking at a gathering of his People's National Front (PNF) on Thursday night, Yameen said the national bank's board must work to ensure that the bank is not “excessively” exposed to risk.
Yameen alleged that the BML recently issued nearly a billion Rufiyaa to the government against the advice of the bank's risk assessment department.
"The risk assessment department has surely advised against it. MVR 600 million has already been taken from the bank to pay the salaries of state employees," he said.
He warned that the biggest risk in lending so much money to the government is because that there is nothing the bank can do to recover the money in case of failure to repay.
"The bank cannot sue the government. MMA [Maldives Monetary Authority] will not underwrite this lost money," he said.
Yameen, who is a former board member of BML, said the board must not act against the advice of the risk assessment department.
"But here it is, because there are political people on the board now, the board has done it [issued a large amount of money to the government as one client]," he said.
