These days, there is no dearth of safe and reliable banking services in Cambodia. According to a recent survey, there are thirty-one commercial banks and thirty-two microfinance institutions licensed in the country.

“These days, there are many people who seek our services,” said Chov Keart, an account officer at Prasac. “They feel reassured because we have proper legal documents to process transactions.”

According to an International Finance Corporation (IFC) report, the number of bank loan applicants grew from 23% to 31% between 2006 and 2008, while microfinance institute loans increased at a rate of more than 55% a year. These financial services serve an important role in boosting Cambodia’s economic growth.

In spite of this however, many Cambodians still resort to the Tong Tin system, which is a primitive and informal method of borrowing money based on “trust”.

In the past, it seemed like the only - albeit risky - option for fast loans. However, the interest charged by Tong Tin moneylenders is absurdly high and borrowers have no choice but to rely on a verbal agreement.

Discussions about legalising the Tong Tin system have been in vain.

Whilst banks ensure legal documents are involved in loan transactions, the basis of a Tong Tin agreement is the unspoken integrity of the other party. Sometimes, there are the unlucky few who get swindled to bankruptcy. Court battles are almost impossible to win under such circumstances.

Despite horror stories reported in the news, Tong Tin is still popular among Cambodian people from disparate class of society, and even among business organizations.

Sea Sokhon, associate director of an international organization, said that while he has heard about Tong Tin scandals, he relies on it because it is “easier to borrow and save money” through this system.

He gives about US$200 to a Tong Tin collector every month.

“I am not afraid of being cheated because we are colleagues and trust each. If there’s dishonesty, Tong Tin moneylenders and borrowers risk ruining their reputation and getting fired,” he said.

“We are not governed by law. We just have a list of all the members’ names so it is impossible to cheat,” he added, refuting reports of Tong Tin moneylenders who have been jailed for misappropriation of funds.

Nevertheless, the risks involved should be highlighted. People should first consider safer options via licensed microfinance institutions and banks instead of the Tong Tin system.