Mauritius Central Bank caps investments in Treasury bonds

Apr 04, 2011

The Governor of Mauritius Central Bank Rundheersing Bheenick announced on March 29th that a limit on banks' investments in Treasury bonds is being introduced.

He explained that this measure should be an incentive for commercial institutions to lend more to businesses and to create a secondary market for Treasury bonds, L'Express de Madagascar newspaper reports.

A cap of 15 per cent on banks' liquid assets is applicable from April for any investment in this sector.

Mr Bheenick believes that, until now, it was too easy for banks to buy Treasury bonds without taking risks and lending to businesses.

He also criticised the bank rates, saying: "They were too high, 1.73 per cent for three months, that is unacceptable."

Previously however, the governor had warned against bad credit during the launch of three Visa credit cards by Cim Finance, one of the financial institutions on the island.

He explained that such organisations must accompany their credit card offer with financial education for consumers.

However, he added that the non-performing loan rate has decreased in the past few years.