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CMA members restructure $1.4B in loans

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The number of applicants for credit restructuring during the period reached 307,875, translating to a 94 per cent approval rate, CMA data show. Heng Chivoan

CMA members restructure $1.4B in loans

Financial institutions that are members of the Cambodia Microfinance Association (CMA) restructured some $1.397 billion in loans for 289,422 borrowers as of February 28 since the National Bank of Cambodia (NBC) on March 27 issued a circular on loan restructuring during Covid-19, according to CMA.

The number of applicants for credit restructuring during the period reached 307,875, translating to a 94 per cent approval rate, CMA data show.

The association has pointed out that the number of applicants has remained on a significant, encouraging downtrend and augurs particularly well for the finance sector.

NBC’s loan-restructuring directive was issued to all banks and financial institutions to restructure credit for loans in four priority sectors – tourism, garments, construction, and transport and logistics, which NBC flagged as the most severely affected by the pandemic.

The circular aimed to maintain financial stability, support economic activity and ease the burden of debtors facing declining revenues during the ongoing Covid-19 outbreak. The directive will be implemented until mid-2021.

Kaing Tongngy, head of CMA’s communications department, told The Post on March 3 that the dwindling number of applicants for loan restructuring signals a decline in Covid-19’s stranglehold on the financial sector.

“With the recent community outbreak, CMA expects an increase in loan restructure requests for the coming months because most clients pay on a monthly basis.

“While we are waiting to see the real impact, we do not expect any major shocks as those in early mid-2020 because the bulk of trade and business remains despite a slower pace.

“People seem to be used to such outbreaks and merely go about their daily lives while being cautious,” he said.

Prasac Microfinance Institution Ltd executive vice-president Say Sony noted a declining trend in loan restructuring even amid the February 20 community transmission.

He said: “The trend is quite in tune with the businesses situation – there were a number of exceptional events in 2020 such as Covid, the floods, as well as two big community outbreaks.

“But, this year we started out with the February 20 community outbreak and we still don’t know the [full extent of the] impact yet, but we’ll keep close tabs on this one.

“At any rate, there were more requests from our clients for a first restructuring, not many for a second one. But after this third outbreak this could see a slight increase.”

According to Tongngy, small and medium-sized enterprises (SME) account for the greater part of restructured loans.

“Clients who are affected by Covid-19 can still request for a loan restructuring till June 2021. With the recent community outbreak, we expect the number of requests to increase but not as much as in early 2020.”

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