Logo of Phnom Penh Post newspaper Phnom Penh Post - ABC, CMA set out six debt relief measures

ABC, CMA set out six debt relief measures

Content image - Phnom Penh Post
Cambodia Microfinance Association (CMA) members have restructured more than $1.4 billion in loans for nearly 300,000 borrowers since March 27, 2020. Hong Menea

ABC, CMA set out six debt relief measures

The Association of Banks in Cambodia (ABC) and Cambodia Microfinance Association (CMA) on April 7 ordered members to adopt six measures of financial relief in light of the economic fallout and depressed incomes caused by the February 20 community transmission of Covid-19.

The non-legally binding command came a day after a coalition of 103 civil society organisations (CSOs) reiterated a call for the government to issue a set of guidelines for all financial institutions in Cambodia to suspend loan payments, set interest rates to zero per cent and waive accrued interest for at least three months to help borrowers cope during the latest Covid-19 pandemic surge.

The move would allow debtors to remain at home and stay safe during the pandemic, free of the fear of losing their land or housing over unpaid debt.

In a joint statement, ABC and CMA addressed the rise in documented novel coronavirus cases and heightening risk of infection.

“After monitoring the ramifications [of the latest outbreak], banking and financial institutions [under ABC and CMA] – all member institutions – are to continuously and fully put these policies into action,” the statement said, calling on members to also follow the guidelines outlined in the National Bank of Cambodia’s (NBC) March 27, 2020 directive on credit restructuring.

The first of the associations’ six orders is to exempt clients infected with the coronavirus from interest payments and penalties for at least one month, and automatically restructure credit (with the client’s consent), deferring principal payments for three months.

Clients purporting to be infected with the virus must present a positive test result confirmed by the relevant authority, the statement added.

Second, automatically restructure credit for clients under quarantine (with their consent), deferring principal and interest payments for one month, and waiving all penalties.

Third, provide prompt, convenient credit-restructuring benefits to clients affected by the pandemic.

Fourth, ease the terms of emergency and supplementary financing loans and cut interest rates to sustain and rehabilitate family economies during and after the health crisis.

Fifth, restructure loans for first homes and waive all penalties.

Sixth, offer as many benefits as possible to clients who have died of Covid-19.

Prasac Microfinance Institution Ltd (Prasac) senior vice-president Say Sony welcomed the move, saying: “What clients need is to reschedule loans to match their cash flow in these tough times, and when the community outbreak is contained, they’ll likely require more funds or loans to restart and reinvest in their businesses.”

The statement noted that all financial institutions have a similar funding structure – 15 per cent from paid-up capital, 15 per cent from long-term debt issued domestically and internationally and 70 per cent from savings deposits.

As of end-February, financial institutions in Cambodia restructured about $4 billion in loans for some 340,000 borrowers since the NBC issued the directive, it said.

Debtors are allowed to pay either interest or principal, it said, adding that most have requested between three and six months’ grace period and agreed to pay only interests, while those severely affected by the pandemic were granted the suspension of loan repayment and interest for three to six months.

Credit-restructuring transactions will continue as long as the pandemic persists and plans will be drawn up according to each client’s situation, it added.

MOST VIEWED

  • Typhoon Noru brings flash floods – 16 dead

    An official warned that that the 16th typhoon of the season, Noru, had brought heavy rains to areas the Mekong River and flooded thousands of homes in the provinces bordering Thailand. As of September 27, the death toll from the flooding had risen to 16. National Committee

  • Siem Reap drain canal now ‘mangrove’ promenade

    A more than half a kilometre long stretch of canal in Siem Reap has been covered and turned into a promenade to attract visitors, said Ly Rasmey, secretary of state at the Ministry of Land Management, Urban Planning and Construction, on September 16. The new pedestrianised

  • Angkor wildlife, aquarium park still to open October

    The Angkor Wildlife and Aquarium complex about 30km southeast of Siem Reap town with initial total investment of more than $70 million is reportedly still on track for an end-October opening. The park is located on a 100ha plot along National Road 6 in Kbon village, Khchas

  • Defence minister reaffirms Kingdom’s staunch support for One-China policy

    Minister of National Defence General Tea Banh has reaffirmed Cambodia’s unwavering support for the One-China policy. Tea Banh was speaking at the September 20 ceremonial handover of 117 vehicles and other military equipment donated by China’s defence ministry, held at Phnom Chumreay International Military Training

  • Thai Senate delegates in Cambodia to discuss anti-graft co-op

    A delegation from Thailand's Senate was in Phnom Penh on September 28 to meet their Cambodian counterparts to discuss strategies for fighting corruption and enhancing cooperation. The Thai delegates were from its Senate’s Committee on Studying and Inspecting Corruption, Misconduct and Strengthening Good Governance. They

  • Deaths due to ‘lifestyle’ diseases rise in Kingdom

    The Ministry of Health has called on people to pay closer attention to their health to protect themselves from non-communicable diseases (NCDs) which it said have caused high rates of deaths in the country. Ministry secretary of state York Sambath made the call at a