The Bank of Mauritius (BoM) issued a communiqué on Saturday 4th of April, informing of the situation of the Bramer Bank. According to the communiqué, neither the Bramer Bank nor Dawood Rawat expressed the intention of investing Rs 1.4 billion for the bank. The BoM explained that the other banks have been hesitant to lend money to Bramer Bank. As a consequence, it is the BoM that has been providing the bank.
The BoM also detailed out the liquidity problems of Bramer Bank. The latter experienced difficulties in maintaining its cash reserve ratio. As a result, it had to rely on the interbank market to get across its liquidity troubles. Further exacerbating the problem, other banks were hesitant to lend money to the bank. Consequently, it was only BoM – the last resort – that has provided for the bank’s needs.
Bramer Bank had requested for a Rs 1 billion line of credit from the BoM to be well-equipped to confront its problems. However, it was refused the loan on the 25th of March because it was argued that the Bramer Bank did not have the required guarantee. Furthermore, the level of liquidity was not adequate to obtain that line of credit. Thereafter, Bramer Bank proposed to have its real-estate property as guarantee. It was once again refused its request though. The BoM affirmed that it could not overstep its role as regulator by giving that line of credit.
On the 27th of March, the Bramer Bank informed the BoM that it was facing massive withdrawal in deposits and that its liquidity problem had worsened. On the 31st of March, BAI Co Ltd informed Bramer Bank and the BoM of its intention to invest Rs 350 million in the bank. But, Bramer Bank itself and Dawood Rawat had not done the same.
According to the BoM, the Bramer Bank was not in the position to rectify its financial situation. Therefore, its licence was revoked on Thursday night (02.04.15) to preserve trust and stability in the financial system.