Cabinet on Wednesday approved the divestment of the government’s stake in the SME Development Finance Corporation (SDFC) to a Bank of Maldives (BML), to enhance lending to small and medium enterprises (SMEs).

According to the President’s Office, the decision followed a Finance Ministry study highlighting the positive impact of BML’s proposal to acquire SDFC. The move is expected to ensure uninterrupted SME financing, leveraging the bank’s stronger financial capacity.

Following the acquisition, BML plans to issue MVR 500 million in loans during the first year and MVR 1.9 billion over the next five years, with MVR 300 million allocated to business start-ups over three years. SDFC will be transformed into an Islamic finance institution operating on Shariah principles and integrated into an advanced digital banking system, President’s Office said.

The President’s Office noted that SDFC will maintain its current lending rates and continue supporting businesses by improving financial efficiency. Nationwide SME digital financing services will expand through the bank’s network, while automation of SDFC’s systems will streamline loan processing and enhance operational efficiency.

Since BML is a public company, SDFC’s governance, planning, and service delivery standards will also be strengthened under its oversight.