Finance Minister Renganaden Padayachy has called on the Bank of Mauritius (BoM) to set up committees to ensure that there is “no abuse by commercial banks”. The Finance Minister was commenting on the recent increase of the Key Repo Rate (soon to be Key Rate) by 50 basis points.
Last week, the KRR was raised for the fifth time in 12 months – shooting from 1.85% in December 2021 to reach 4.5% a year later.
“I have asked the Governor of the Bank of Mauritius to set up committees to monitor the evolution of the Prime Lending Rate. The aim is not to have any abuse from commercial banks in an attempt to make up for their shortfall during COVID-19,” the minister was cited as telling reporters.
The government’s support to the population, he added, has led to the resilience of the banking system, while allowing banks to continue to perform well. Hence the request to banks to do their share.
“I have asked for a report and I am making it clear that we too know how to act. Help should not be coming from just one side. The Central Bank has helped to prevent some people from going bankrupt. I will not allow any institution upset our future perspectives. The banks have always responded favourably. In the event of abuse by commercial banks, the Central Bank would take action,” Padayachy warned.
The minister reiterated that the normalisation process is a global phenomenon as are successive interest rate hikes. He pointed out that the Repo Rate was initially around 9%.
He defended his ministry’s performance, adding the government will focus on rebuilding the country’s reserves – which currently stand at $6.5billion.
Source: Defi Media