Mauritius’s central bank increased the minimum cash reserve ratio for commercial banks to 7 percent from 6 percent effective Feb. 25, according to a statement on its website today.
The new ratio for how much cash banks must keep at the Bank of Mauritius is the highest since August 2008, according to central bank data.
It has been raised “taking into account the continued high excess liquidity in the system,” the Port Louis-based bank said.
The change will push banks to increase lending rates, or reduce interest rates on deposits, or a combination of both, Aisha Timol, chief executive officer of the Mauritius Bankers Association, said by phone from Port Louis. As at Feb. 10, lenders were holding 5.7 billion rupees ($194 million) in excess of the required reserves, the central bank said on Feb. 17.