The Bank of Maldives has announced plans to slash interest rates on housing and personal loans and has launched a new loan scheme to encourage investment in green technologies.
The interest rate for real estate loans was reduced by two percent, and now stands at ten percent. Up to MVR150million (US$9.7million) can be obtained as real estate loans.
Personal loans, for which interest rates stood at 18 percent, can now be obtained at an interest rate of 11.75 percent with collateral. Up to MVR100,000 (US$6,485) can be obtained through the personal loan scheme
BML’s CEO and Managing Director Andrew Healy said: “Now that our financial position allows it, we have a responsibility to make the cost of borrowing as affordable as possible. These reduced rates will hugely benefit tens of thousands of individuals and families. For example, the reduced interest rate for an average home construction loan could lead to a saving of as much as MVR 1.8 million over the life of the loan.”
A spokesman said BML now has the lowest interest rates in the country.
The new rates will be effective for loans approved from April 3.
The green loan scheme, launched on Sunday, aims to promote green technologies such as solar panels and environmentally friendly appliances.
The scheme, inaugurated by Environment Minister Thoriq Ibrahim, provides loans ranging from MVR50,000 (US$3242) to MVR20million (US$1.3million) with a repayment period of up to 20 years.
Loans are to be issued at an interest rate of ten percent.
In December, the environment ministry introduced “net metering regulations” for connecting renewable energy systems managed by private parties to state-owned utility power grids.
The Maldives is among the world’s most vulnerable countries to climate change. The government has pledged to reduce projected levels of greenhouse gas emissions for 2030 by ten percent, a target criticized as falling far short of ambitious plans by former President Mohamed Nasheed to become carbon neutral.
Correction: March 1, 2015
An earlier version of this article misstated the reduced interest rate for real estate loan and personal loans. For real estate loans, the interest rate stands at ten percent, not nine. For personal loans with collateral, the interest rate stands at 11.75 percent, and not 11.
This article also previously misstated the lowest borrowing limit for the green loan. It is MVR50,000, not MVR500,000.