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Borrowers facing Covid-19 induced hardships to get reprieve from MFIs

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Cambodia Microfinance Association (CMA) says it is committed to offering loan restructuring for clients whose incomes have been affected by the Covid-19 pandemic. Photo supplied

Borrowers facing Covid-19 induced hardships to get reprieve from MFIs

Non-profit, membership-based NGO Cambodia Microfinance Association (CMA) is committed to offering loan restructuring for clients whose incomes have been affected by the Covid-19 pandemic, it said in a joint statement on Friday.

All CMA members vowed to implement measures and resolve their clients’ issues “based on their internal principal, type of clients, impact and actual situation for each” client in compliance with National Bank of Cambodia (NBC) regulations and ensure the sector’s sustainability, said the CMA.

“To have their loans restructured, affected clients must contact the microfinance institutions [MFIs] from which they took out their loans, discuss the situation and seek a win-win solution for the sustainability of the financial sector and the national economy.

“For those clients who have experienced little or no impact and are capable to repay their loans, the association encourages them to continue their payments as usual to give [MFIs] the opportunity to help the most affected clients,” it said.

Vithey Microfinance Plc CEO Bun Mony said no clients had requested to refinance their loans. “If we have any affected clients contact us, we’ll send our staff to meet them and assess their situation.

“We plan to start loan restructuring this month in compliance with our regulator’s [NBC] guidelines if we find out that many of our clients are affected,” he said.

Prasac Microfinance Institution Ltd executive vice-president Say Sony told The Post on Sunday that the few clients requesting to reschedule their loans were mostly from the four priority sectors identified by the NBC late last month.

“Some clients face a direct impact from Covid-19 and others an indirect one. However, most of our clients still honour their loan repayment obligations and make their payments on schedule.

“In response to clients’ requests, we assess their situations and discuss an appropriate solution acceptable for both parties,” he said.

On March 27, the NBC issued a directive to all banks and financial institutions to restructure credit for loans in four priority sectors, a move lauded by the private sector.

The directive aims to maintain financial stability, support economic activity and ease the burden of debtors facing declining revenues during the ongoing Covid-19 outbreak.

The four priority sectors cited by the NBC were tourism (including food and beverage, as well as other support services), garments (including employees), construction (exclusively for first house purchasers, shops and first mortgages) and transport (especially taxi drivers and tuk-tuk drivers) and logistics.

The directive also recommends banks and financial institutions to verify that clients are struggling financially before restructuring their loans.

As of the end of last year, Cambodia has 46 commercial banks, 15 specialised banks and 82 MFIs. There are also 248 rural credit operators, 15 leasing companies and 20 payment service providers, an NBC report said.

Banks’ outstanding loan portfolio reached $24.5 billion last year while deposits stood at $25.5 billion. Among MFIs, loans reached $7.2 billion and deposits $3.9 billion.

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