The Cabinet has approved the divestment of the Government’s stake in the Small and Medium Enterprise Development Finance Corporation (SDFC) to the Bank of Maldives (BML), following a proposal from the bank.

The decision was made after careful consideration of a report submitted by the Ministry of Finance and Planning, which outlined the potential benefits of the transfer. The report concluded that the divestment would support the Government’s objective of ensuring continued and uninterrupted access to finance for small and medium enterprises (SMEs), while leveraging BML’s financial capacity and nationwide presence.

SDFC, which was established to provide dedicated financial services to SMEs, will continue to operate with its original mandate under the new ownership, the President’s Office stated. According to the Government, the transition will allow for the expansion of SME lending and improved service delivery through integration with BML’s existing infrastructure.

BML has proposed to disburse MVR 500 million in SME loans during the first year following the acquisition, with a total of MVR 1.9 billion allocated over a five-year period. An additional MVR 300 million is expected to be released over the next three years specifically to support start-up ventures.

SDFC is expected to operate as an Islamic finance institution, and offer services in compliance with Shariah principles after the acquisition. The institution will also adopt digital banking systems aimed at improving operational efficiency, reducing manual processes, and accelerating loan approvals.

The Government stated that the sale will not result in increased borrowing costs for SMEs, and current interest rate levels will be maintained. The restructuring is intended to enhance the overall business environment and improve access to capital for enterprises across the country. Once implemented, the integration is expected to extend digital SME financing services through BML’s national network.