Members of Cambodia’s apex bodies of the banking and microfinance industries have agreed to ease restrictions on loan repayments, reduce interest rates, as well as restructure loans for customers deemed to be significantly affected by the heavy rains and floods that have swept the Kingdom in recent months.
The decision, revealed in an October 19 joint statement by the Banking Association of Cambodia (ABC) and the Cambodia Microfinance Association (CMA), aims to offer “understanding and favour” to the worst affected customers, as recommended by Prime Minister Hun Sen two days earlier.
The offer will be made in consonance with a meeting between the ABC, CMA and National Bank of Cambodia (NBC) – held on October 17 – and in line with NBC Notification No T7 022.818 dated October 18, the statement said.
“In this spirit, the banking and financial institutions [BFI] within the two associations’ ranks will provide good cooperation in the framework of consumer protection and continue to favour through loan restructuring according to the conditions set by the National Bank of Cambodia.
“The institutions will also look into the possibility of easing interest rates and other fees related to credit, and/or waiving fines and avoiding foreclosure, with a deep sense of understanding and in accordance with the actual situation of customers,” it added.
CMA chairman and ABC board member Sok Voeun told The Post on October 19 that the institutions “are ready to support our clients”, noting that Kampong Thom, Battambang, Siem Reap and Banteay Meanchey provinces have been particularly hard hit by the floods.
He affirmed that the effect of the decision would not materially steer the cumulative growth rate for the banking and microfinance industries from projections.
CMA spokesman Kaing Tongngy told The Post on October 19 that the institutions would take their clients’ flood woes into account, “as usual”, to help ease their burdens.
“As our clients are being affected by the flood, the financial institutions will need to share the burden. CMA has been working closely with NBC and our members on the legal framework and operation to ensure efficient supports to the affected clients via loan restructure or other possible means.
“We are also mobilising donation with our members BFIs to support the affected communities as a part of our CSR [corporate social responsibility] programme,” he said.
Cambodia experiences flooding events almost every year, with varying degrees of impact, Tongngy said, underlining that major floods and natural disasters could derail growth in the microfinance industry, with 19 per cent of all of its outstanding loans related to agriculture.
Prime Minister Hun Sen on October 18 announced that he would travel to four flood-affected provinces – Siem Reap, Banteay Meanchey, Battambang and Pursat – for five days starting on October 20, to meet with the victims and find solutions to their plight.
A preliminary report by the Ministry of Economy and Finance indicated that, as of October 12, more than 200,000ha of rice fields nationwide were found to be significantly affected by the floods, of which 85,000ha suffered material damage, although over 48,000ha are considered to be recoverable.