More than 100 unofficial lenders have flooded into the National Bank of Cambodia seeking formal registration after the authorities announced a crackdown earlier this month on unrecognised operators.
In a joint declaration from the Ministry of Economy and Finance and the NBC on February 2, officials appealed to consumers to be wary of the increasing prevalence of unrecognised lenders, often operating in small groups and masquerading as NGOs or microfinance institutions.
Officials said these lenders were charging high interest rates and threatening people’s livelihoods without having the proper financial credentials in place.
Speaking after a conference to launch a code of best practices for Cambodia’s finance industry on Monday, Chea Chanto, governor of the NBC, said that unofficial lenders had flocked to the NBC since a February 2 announcement seeking registration as a micro lenders.
“We encourage them to register. For those who operating by charging a high interest rate, we will take action according to the law,” Chanto said.
“Some of them have turned up. Up to now there are more than 100 already,” he said.
According to the website of the Cambodia Microfinance Association, under Cambodian regulations, micro lenders with a loan portfolio of $25,000 or more, or $250 in deposits, or 100 depositors are required to register with the NBC to obtain formal recognition.
MFIs with a loan portfolio of $250,000 or more, 10,000 or more borrowers, $25,000 or more in total deposits or 1,000 or more depositors must obtain a MFI licence from the NBC.
In 2013, there were 38 licensed MFIs and 33 registered rural credit operators in Cambodia.
The NBC could not be reached yesterday to clarify the status of the influx of new lenders seeking registration.
Bun Mony, president of Cambodia Microfinance Association, said formalising unrecognised lenders would result in better monitoring and help to curb unsustainable lending.
“It is good for the industry and customers,” he said.
Sin Senacheert, CEO of microfinance institution Prasac, said increased formalisation of the industry created a more even playing field.
“Competition has to be fair. While [Prasac] are being monitored strictly by NBC, these informal lenders can do whatever they want,” he said.
“So I welcome them to register [for official recognition] for a fair competition,” he added.
Mey Vann, director of the Department of Industry and Finance at the Ministry of Economy and Finance, yesterday confirmed the registration, but could not add further details.
“Registration has to go to NBC as they are the regulator. I have not received report on figure yet,” he said.
Vann added that his ministry was meeting with the NBC today to look at the issue further.