Auditor General faults NSB over $9 m loan to private firm in Maldives
The Auditor General has found fault with the National Savings Bank (NSB) for extending a US$ 9 million loan to a private tourism company in the Maldives, a move that violates the bank’s legal mandate.
The loan currently classified as non-performing, was issued without a proper risk assessment and remains unpaid, raising serious concerns about regulatory oversight and governance at the state-owned savings bank.
The loan was given to RPI Pvt Ltd in the Maldives in 2018, the Auditor General’s latest report revealed. The borrower had not paid any capital repayment or any arrears interest of $ 4.18 million which was outstanding as at 31 May 2024.
The loan was granted to this foreign company which is operating under the tourism industry for the construction of villas and this does not come under the scope specified in the NSB Act, the national audit report revealed.
The provision of credit for construction work to a private company engaged in the tourism industry in a foreign country was an area not covered by the National Savings Bank Act and evidence was not revealed to the audit that a comprehensive credit assessment or risk assessment had been carried out before the loan was granted.
The initial grace period of one year given by the bank for repayment of capital after disbursement of the loan amount had been extended till 2022 from time to time.
Despite being a foreign company not covered by the Circular No. 5 of 2020 issued by the Central Bank, the borrower company had not made any capital repayments until 31 December 2023, even though the bank had granted loan concessions under the said Circular.
This loan amount was classified as a non-performing loan amount at the end of the year and any field inspection has not yet been carried out by an independent party related to technical skills and competence, the audit report pointed out.
A sum of Rs.3,800 million, out of total loans and advances, had been foreign loans and the total value had been included in the $9 million loan given to this private company in the Maldives and the arrears of interest calculated on it as at 31 December 2023.
The NSB asset base recorded a marginal increase to Rs. 1,710 billion as at end October 2024 from Rs. 1,687 billion as at end 2023. The deposit base of the bank increased by 2.2 per cent.
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