The Advanced Bank of Asia (ABA) last week loaned PRASAC Microfinance Institution US$2 million to support the rapid growth of the microfinance loan industry.

The agreement was made on May 23 between Sim Senacheert, CEO of PRASAC, and Askhat Azhikhanov, Deputy Chief Executive Officer of ABA Bank, according to the statement from PRASAC.

The domestic loan was chosen to “diversify our funding sources” because of a large reliance on overseas capital which moves many of the jobs created away from the Kingdom Sim told the Post on Monday.

The demand for microfinance loans is increasing, and PRASAC is finding the increased demand hard to meet, which is the driving reason behind the decision to get the loan, he said.

Receiving loans from abroad takes time and the process is complicated compared to getting a domestic loan.

The loan had a higher interest rate compared to a foreign fund, but it is “easy and fast” he said.

So far about seven or eight Microfinance Institutions have received loans from local banks worth between US$30-$40 million.

“It is still small, but it is a successful achievement for us” said Bun Mony, chairman of Cambodia’s Microfinance Association and CEO of Sathapana Microfinance Institution.

Sathapana Microfinance Institution has received $7 million from commercial banks since last year.

“Now, I am negotiating with many other banks” said Bun Mony.

PRASAC has been received loans from three local banks worth close to $14 million and now is in discussion with others, said Sim Senacheert.

PRASAC’s total loan portfolio was more than $150 million as of December 2011 and there were 125,127 credit clients.

To contact the reporter on this story: May Kunmakara at [email protected]