The Government has approved the sale of its stake in the SME Development Finance Corporation (SDFC) to the Bank of Maldives (BML), a move presented as a strategy to streamline SME financing. However, the decision marks a sharp departure from the original rationale for establishing SDFC in the first place.
The Cabinet’s decision followed a review of a research paper submitted by the Ministry of Finance and Planning, which highlighted the potential benefits of the proposed sale. BML had expressed formal interest in acquiring the Government’s shareholding in SDFC, prompting the move.
According to the Government, the main objective is to ensure continuity in SME lending, with BML committing to lend MVR 500 million in the first year. Over five years, the bank aims to lend MVR 1.9 billion, with MVR 300 million reserved for start-up financing over the next three years.
SDFC will be restructured as an Islamic finance institution under BML. It will adopt Shariah-compliant banking practices and a digital-first approach. The Government claims this transition will improve efficiency, speed up loan approvals, and extend SME services across the country through BML’s network.
Yet, this decision also raises significant questions about the future of inclusive financing. SDFC was founded in 2019 as a response to longstanding complaints that commercial banks, including BML, were unwilling to lend to small businesses. This was especially true for new ventures and those based in the atolls, where access to capital was limited and often required heavy collateral. At the time, the Government argued that a dedicated SME-focused lender was essential to bridge a persistent financing gap.
By selling SDFC back into the very system it was meant to supplement, critics warn that the Government risks rolling back progress on financial inclusion. While BML has committed to keeping current interest rates and expanding reach, it remains unclear whether the bank’s lending culture will shift meaningfully enough to meet the unique needs of smaller businesses and start-ups.
The move reflects a broader policy shift toward consolidation and reliance on larger institutions. Whether this will benefit entrepreneurs across the country, or simply centralise control and efficiency at the cost of accessibility, remains to be seen.
