Logo of Phnom Penh Post newspaper Phnom Penh Post - MFI deposits rise during Q3

MFI deposits rise during Q3

MFI deposits rise during Q3

091116_12
Customers use an ATM to withdraw money at ACLEDA Bank’s head office in Phnom Penh. Despite rising MFI deposits, industry analysts say customers still prefer to keep their money with banks.

Amret and Sathapana say perceptions must change to realise deposit potential

DEPOSITS grew in the third quarter at the two Cambodian microfinance institutions (MFIs) licensed to hold savings, even as key sector figures said MFIs were struggling to overcome perceptions among Cambodians that their money was better off at home or in a registered bank.

Deposits at Amret, the second largest MFI by outstanding loans, grew 60 percent to US$1.6 million quarter on quarter in the three months ended September amid a promotional campaign, figures from the Cambodian Microfinance Association (CMA) show. Deposits at Sathapana, the third biggest microfinance lender, rose 12 percent to $2.47 million over the same period.

General Manager Chea Phalarin said public confidence in MFIs was increasing. However, even though Amret offered competitive deposit rates of 6 percent for a six-month term deposit and 8.5 percent over one year, customers still preferred to deposit savings at commercial banks where rates were generally around 6 percent, he said.

“Banks offer lower interest rates than MFIs, but some customers deposit at banks because they want access to other bank services,” said Chea Phalarin.

CMA president Hout Ieng Tong said the low public confidence in the ability of MFIs to manage money needed to be overcome for the good of the economy. Because of their wide rural networks, MFIs were well-positioned to absorb excess savings and reintroduce money to the economy through lending, reducing the country’s reliance on foreign borrowing, he said. MFIs and banks say the high cost of borrowing from abroad is a key reason for high rates in Cambodia.

Bun Mony, chairman of Sathapana, which offers 5 percent on six-month deposits and 7.5 percent on longer terms, said MFIs were well-placed to lead the change of public opinion required to encourage deposits.

“The traditional habit of Cambodian people is keeping money at home rather than depositing at MFIs or banks,” he said. “We want people to be aware that MFIs are not just a place where they can borrow money, but also a place they can deposit their money.”

Room to grow
According to a survey of the global microfinance sector published in September by the Economist Intelligence Unit, Cambodian MFIs have a lot of room to expand services and attract new customers. Although it ranked 14th out of 55 countries overall for its regulatory, investment and institutional environment, the country scored the lowest possible score for the range of MFI services offered – most providers stick to basic micro-credit.

CMA figures show 124,679 people deposited $7.38 million at MFIs by the end of the third quarter – 20.7 percent more in deposits by 17,700 additional depositors compared with three months earlier. The figures excluded ACLEDA Bank.

MOST VIEWED

  • Reuters: US Embassy fired 32 staff members for sharing pornography

    The United States Embassy in Phnom Penh has fired 32 non-diplomatic staff members who were allegedly caught exchanging pornographic images and video, including of minors, according to the news agency Reuters. Four sources, who spoke on condition of anonymity, told Reuters the content was shared in

  • Our 2018 guide to spending Khmer New Year in Phnom Penh

    Khmer New Year festivities are upon us. For the next few days, travellers will be making their way to their home provinces to eat, celebrate, play traditional games and visit a pagoda with offerings. If you will be staying put in Phnom Penh for the

  • US think tank warns of China's 'ulterior motives'

    A US think tank on Tuesday warned that spreading Chinese investment in the Indo-Pacific follows a pattern of leveraging geopolitical influence at the expense of the nations receiving investment, including Cambodia. The report looks at a sample of 15 Chinese port development projects, noting that the

  • More than three tonnes of ivory reportedly bound for Cambodia seized in Mozambique

    A total of 3.5 tonnes of ivory reportedly bound for Cambodia was seized by authorities in Mozambique late last week, according to the NGO Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). CITES' information was based on a report from the