The Cambodia Microfinance Association (CMA) said the number of applicants for credit restructuring remained on a significant, encouraging downtrend and augurs particularly well for the finance sector.
Last month, the National Bank of Cambodia (NBC) announced that all financial institutions should continue to allow restructuring of their customer’s loans until mid-2021.
CMA Communications Department director Kaing Tongngy said that by November’s end over 290,000 clients affected by Covid-19 had applied to the association’s 103 member microfinance institutions (MFIs) for credit restructuring.
He said more than 270,000 of these clients have been approved by their MFI to restructure loans collectively totalling more than $1.3 billion in credit.
“Most recently, the number of customers requesting credit restructuring hadn’t been ticking up, but rather appeared to be routinely declining. The exception being the last two to three weeks, where the number of applications has remained at around 1,000 per week,” Tongngy said.
He said that as of October the number of loans at risk for default in the microfinance sector fell to 2.2 per cent. As a general rule, the sector is considered to be in good health if the number of at-risk loans is under five per cent.
He added: “We think that the principle of credit restructuring for our customers really helped to ease their repayment burden, especially during this period affected by Covid-19, and this has contributed to our lower-than-expected credit risk.”
Prasac Microfinance Institution Ltd (Prasac) executive vice-president Say Sony told The Post that his MFI has also seen a declining number of restructuring requests from its customers despite the fact that the Covid-19 pandemic has not yet been contained.
He said: “We are testament to the gradually decreasing trend of customers applying for credit restructuring as compared with the initial phases [of Covid-19].
“But we will continue to restructure credit for customers so that it remains possible for them to make their payments. At the same time, we’ll continue to prepare new loans for [eligible] customers as usual.”
Vithey Microfinance Plc director and CEO Bun Mony echoed Sony’s comments on the drop in loan restructuring applications at his institutions over the past few months, which he said shows that people’s livelihoods seem to be on a path to normalcy.
“There are now several Covid-19 vaccines on the table, and that could reduce the amount of credit restructuring. Perhaps there’ll be no need to continue to restructure credit,” he said.
According to Tongngy, total loans in the Cambodian sector today – including MFIs, leasing companies and rural credit operators – amounted to more than $7 billion with more than 2.1 million clients, while deposits totalled $3.8 billion with 2.8 million depositors.