MOZAMBICAN BANKS ASKED TO MAKE HUGE INCREASE IN THEIR PAID-UP CAPITAL

MAPUTO, The Bank of Mozambique has announced a massive increase in the capital requirements for commercial banks operating in the country.

Addressing a media conference here Monday night, the central bank governor, Rogerio Zandamela, said the minimum share capital required for a commercial bank was being increased from 70 million meticais (about 1.05 million US dollars) to 1.7 billion meticais (about 25.6 million USD), or an increase of 2,328 per cent.

Existing commercial banks are being given three years to raise their share capital to this level. The central bank also increased the minimum solvency ratio for a commercial bank from eight per cent to 12 per cent. Again, the banks have three years to reach this ratio.

Zandamela said the central bank’s Monetary Policy Committee, which met earlier Monday, decided to reduce one of the Bank of Mozambique’s own benchmark interest rates.

The Standing Lending Facility, the interest rate paid by commercial banks to the central bank for money borrowed on the Inter-bank Money Market, has been cut by 50 basis points, from 23.25 per cent, to 22.75 per cent.

However, the Standing Deposit Facility, the rate paid by the central bank to the commercial banks on money they deposit with it, remains at 16.25 per cent. Likewise, the Compulsory Reserves Coefficient — the amount of money that the commercial banks must deposit with the Bank of Mozambique — also remains unchanged, at 15.5 per cent.

As Zandamela had promised in February, the central bank has also introduced a new interest rate, known as the Inter-bank Money Market Rate (MIMO), which is set at 21.75 per cent. The Bank’s interventions on the inter-bank money market to regulate liquidity will be based on this new rate.

The introduction of the new rate, Zandamela said, “is intended to strengthen the mechanism for forming interest rates in the economy, making it more transparent and in line with good international practices”.

Macroeconomic indicators were pointing in the right direction, the governor said. Inflation has fallen sharply. Inflation in March, as measured by the consumer price indices in the three largest cities — Maputo, Nampula, and Beira — was only 0.88 per cent, compared with 1.25 per cent in February and 2.15 per cent in January.

Source: NAM NEWS NETWORK