The Cambodia Microfinance Association (CMA) issued an announcement yesterday which further attempts to distance lending institutions from the realm of politics following an aggressive push by the government earlier this year to differentiate microfinance institutions (MFIs) from state-run institutions ahead of the commune elections.
The announcement by CMA serves as a new code of conduct for its 87 members, aimed at strengthening the integrity of microfinance institutions (MFIs) in light of government scrutiny.
Yun Sovanna, general secretary of CMA, explained that the announcement is meant to inform both key stakeholders and the public of the importance of the sector.
“We also want to emphasise the obligation to borrowers and the apolitical nature of the MFIs,” said Sovanna. “As a commercial and non-political entity, our staff should not engage in politics during work hours and it is common sense they cannot use their MFI for political advantage.”
The announcement condemned several unethical principles, including the acceptance of identification cards and family books as collateral for loans, the attempt of some staff to seek profits by claiming their MFIs are public institutions, and the use of logos which allude to specific political parties or affiliations.
The government has spearheaded a series of regulatory changes regarding the MFI sector this year, most notably by imposing an 18 percent interest rate cap on new loans.