Logo of Phnom Penh Post newspaper Phnom Penh Post - MFI group warns about shady Facebook adverts

MFI group warns about shady Facebook adverts

MFI group warns about shady Facebook adverts

A representative of the Cambodia Microfinance Association (CMA) yesterday warned the public on the dangers of taking cash loans from unfamiliar institutions, noting that shady lenders were boosting their advertisements.

Yun Sovanna, executive director of the CMA, said Sunday that so-called easy cash loans are becoming increasing noticeable on Facebook. He noted that citizens should examine critically any offers they see advertised on the social network as the lenders may or may not be licensed with the central bank.

“It could seriously impact society and the country’s economy if more people are in debt with unregulated lenders,” he said, adding that if such services are allowed to continue operating, more people could be harmed and eventually the entire sector’s reputation would be negatively affected.

Advertisements for easy cash loans have been growing more prevalent recently on social media as well as adorning placards on the backs of tuk-tuks. Often these services will offer loans without the need for collateral but will fail to reveal the true interest rate.

Chea Serey, director-general of the National Bank of Cambodia (NBC), said on Sunday that NBC is aware of the issue and has made many statements warning the public about predatory lending practices.

“We welcome the CMA’s announcement reinforcing our stance and hope that it can promote better education and awareness programs to the public,” she said. “On the NBC side, we are cooperating closely with relevant enforcement agencies to crack down on this practice.”

However, Ngeth Chou, senior consultant at Emerging Markets Consulting (EMC), said yesterday that the loans offered by unlicensed institutions are very risky and that the NBC should take serious action rather than just make announcements to control the issue.

“Our people still have low financial knowledge, which means we need financial regulators to work actively to protect the public,” he said. “We only regulate those who have licences by taking action such as putting a cap on interests. But if we allow the unlicensed operators to offer the same service, it is unfair to formal institutions. It discourages operators to join the formal sector.”

In August last year, the central bank fined an unnamed microfinance institution $100,000 for engaging in non-transparent lending practices.

Around the same time the central bank launched a dedicated hotline for customers to report any grievances concerning the lending practices of banks or MFIs.

MOST VIEWED

  • Kingdom may hire Turkish power ship

    Cambodia is considering negotiating with Turkey to hire a 200MW-capacity power ship to meet electricity demands as the country faces an ongoing electrical shortage, according to the prime minister. Speaking to garment workers in Pursat province on Wednesday, Prime Minister Hun Sen said Electricite du

  • EDC tackles power shortfall

    Electrcite Du Cambodge (EDC) on Monday issued a statement updating the public on its efforts to tackle insufficient electricity supplies during the ongoing dry season. Reductions in electricity prices have resulted in a steady increase in consumers in the Kingdom, while local and international investors

  • Woman who scaled Cambodia’s three highest peaks eyes Everest

    One of the very few Cambodian women to have successfully reached the Kingdom’s three highest peaks is now eyeing Malaysia’s tallest mountain, Mount Kinabalu, and potentially even the world’s tallest straddling Nepal and China, Mount Everest. While in many Western countries it

  • Cheap, clean and efficient: The firm leading Cambodia’s solar revolution

    Sitting in her bright and airy 17th floor office, Rithya Menon, Okra Smart Solar’s lead firmware engineer, checks the frequently updating data telling her everything about how well their community services are operating. “I saw in the data that there was a problem with