A government official lambasted the slow application rate for non-governmental organizations (NGOs) that operate as microfinance lenders, urging them to register with the National Bank of Cambodia (NBC).
Interior Minister Sar Kheng made the statement at a recent workshop about the Law on Associations and Non-Governmental Organisations (LANGO), AKP reported.
According to the data the minister presented, only 155 of 620 NGOs registered with the Ministry of Interior have fulfilled the application requirements for the NBC to allow them to continue microfinance lending.
A registration crackdown began in February of last year, after the NBC and the Ministry of Economy and Finance issued a warning against the rise of unlicensed lenders, associations and NGOs. The announcement called for all lending operations to register or run the risk of a legal consequences.
Chea Serey, director-general of the NBC, told the Post that since the joint statement was issued, unlicensed and informal lenders have flocked to the central bank to apply for registration.
“[About] 300 informal lenders have applied to NBC to be registered following the joint statement,” she said, adding that 90 of them had received approval.
“We are currently looking into these applications and may decide to register, license or require the NGO to stop doing credit activities all together if they do not meet the criteria,” she said. For the criteria requirements, she referred the central bank’s prakas.
According to the prakas, Cambodian law only requires NGO lenders that have a loan portfolio of $25,000 or more, with $250 in deposits, to obtain formal recognition from the NBC. Those that have a loan portfolio of $250,000 or more, or $25,000 in deposits, must obtain a MFI license.
Hout Ieng Tong, president of the Cambodian Microfinance Association (CMA), encouraged NGOs lenders to register with the NBC.
“The MFI registration policy by the NBC plays an important role in lending operations,” he said, adding that once registered, lenders are protected by the law.
He added that current regulations require all credit operations – regardless of their size – to register.