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A customer service employee
A customer service employee finalises a transaction at a microfinance institution in Kampong Speu province in December. Hong Menea

MFI deposits double in 2014

The total amount of savings at Cambodia’s deposit-taking microfinance institutions (MFIs) reached $897 million by the end of 2014, more than doubling from its 2013 base of $445 million, according to figures from the Cambodian Microfinance Association (CMA).

Of the 39 MFIs operating in Cambodia, seven have gained licences to accept deposits since a law was passed in 2007 allowing the practice.

CMA president Bun Mony said the boost in deposits reflected the positive performance of the Kingdom’s economy, especially in rural areas where most of the MFI’s clients are located.

“Our operating capacity is now similar to banks, or even better than some banks,” he said, adding that major MFIs now offer financial products and services such as ATMs, internet banking and mobile banking.

“The value of assets at some major MFIs and the services on the offer are now much better [than some banks] and these build trust with our customers.”

According to Mony, deposits collected from the Phnom Penh area represented about 30 to 40 per cent of all MFI savings, with the rest coming from the country’s provinces.

Prasac is the largest MFI with deposits worth $305 million, followed by Hattakasekar Limited (HKL) at $173 million, Sathapana Limited at $166 million, and Amret at $153 million.

The three remaining MFIs – AMK, Credit, and VisionFund – received less than $40 million each.

The average interest rate on a six-month deposit at a bank is about 4 per cent, while the average rates on offer at MFIs, over the same period, is about 6.5 per cent.

Prasac CEO Sim Senacheert said that one of the main reasons behind the boom was MFIs offering a higher savings rate than banks.

“People know that we are a place that can ensure security for their money,” he said, adding that there is increasing public confidence in MFIs while their financial products have become far more developed.

“We can now complement the banking system by providing banking services in areas where banks have not been available before.”

By the end of last year, MFIs installed a total of 204 ATMs across the country, a number expected to reach 334 by the end of this year.

The amount of money deposited in Cambodia’s MFIs stood at 44 per cent of the $2.03 billion total loaned by the end of 2014, according to the CMA.

At Acleda Bank, which started out as a microfinance institution but made the transition to commercial banking in 2003, competition from MFIs is not a worry.

Rather, it reflected Cambodians’ increasing access to various forms of finance, said Acleda CEO In Channy.

“We want more people putting their money in banks and MFIs so that we can use locally-sourced funds to provide loans to Cambodians,” he said.

“Until now, local funds have not seen their full potential yet.”

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