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.