POS Loan Changes Make Things Easier for the Bank, Not for Businesses

The Bank of Maldives (BML), which promotes itself as “the People’s Bank,” has once again introduced another controversial scheme, reinforcing the growing public perception that the bank shows little genuine concern for its customers.

BML recently announced changes to its Point of Sale (POS) loan facility for businesses. While the bank claims the changes make the loan process “easier” by reducing approval time to just five days, it has simultaneously shortened the repayment period from five years to two years and introduced mandatory daily repayments.

As a result, many business owners argue that the changes benefit the bank rather than merchants, placing an even greater financial burden on businesses.

Who Is It Really Easier For?

BML presented these changes as improvements for business customers. Previously, loan approval could take up to one month, whereas loans can now reportedly be approved within five days.

At first glance, this appears to be a positive development. However, the conditions attached to these “improvements” reveal a much more troubling reality for businesses.

Previously, borrowers could repay the loan over five years through monthly installments. Under the new system, the loan must be fully repaid within two years through daily deductions.

For example, a loan of MVR 2 million would require repayments of approximately MVR 3,000 every single day. Instead of allowing business owners to make repayments manually, BML now automatically deducts the required amount directly from the merchant’s POS account.

Weekends, public holidays, or slow business days make no difference. Even if the business is closed on a particular day, the repayment will still be deducted from the POS account.

A Serious Blow to Business Cash Flow

Small businesses depend heavily on healthy cash flow to survive.

Requiring daily loan repayments directly affects day-to-day operations. Businesses may struggle to:

Purchase inventory

Pay employee salaries

Cover unexpected operating expenses

While faster loan approvals may encourage more businesses to borrow, this also benefits the bank.

The more businesses that take loans, the greater the income BML earns from financing charges. Although the bank describes the product as Islamic financing with a fixed 12% profit rate, critics argue that the arrangement significantly increases the bank’s financial returns while reducing its lending risk through daily collections.

The question therefore becomes: who has really benefited from these “easier” loan terms?

What Are Businesses Actually Asking For?

The views presented in this article are based on discussions with around twelve business owners regarding the new POS loan policy.

Business owners generally welcome the faster approval process. However, they argue that the repayment conditions are unrealistic and do not reflect the realities of running a business.

The solutions they propose include:

Extending the repayment period back to at least five years.

Replacing daily repayments with monthly installments.

Some business owners even stated that they would accept a higher financing rate of up to 15% if it meant preserving healthy cash flow through more manageable repayment terms.

According to them, maintaining business liquidity is far more important than obtaining slightly cheaper financing.

The Responsibility of a National Bank

BML is not just another commercial bank. It is regarded as the national bank of the Maldives.

In a country where banking competition remains limited, every major decision made by BML has a direct impact on small businesses and the wider public.

Changes introduced under the label of making banking “easier” should provide genuine benefits to customers. If customers instead perceive these changes as another scheme that primarily serves the bank’s interests, then BML should seriously reconsider and review its policies.