Mauritius' central bank raised bank reserve requirements to 7 percent from 6 percent on Wednesday, citing the need to tackle excess liquidity and maintain financial stability.
The change will take effect from Friday and run until March 10, the bank said.
"Taking into account the continued high excess liquidity in the system, the bank has decided to raise the cash reserve ratio from 6.0 percent to 7.0 percent," the bank said in a statement.
During the two-week period, banks will have to maintain average cash balances equivalent to 7.0 per cent of their average deposit holdings for the period between February 11-24.
The Indian Ocean island central bank has been expressing concerns over excess sector liquidity since last September, urging commercial banks to lend more.
The bank even said it would propose a cap on how much commercial banks could hold in government securities.
The central statistics office forecast Mauritius' economy would expand by 4.2 percent this year. (Reporting by Jean Paul Arouff; editing by Patrick Graham)