THE Kingdom’s growing agricultural sector is leading to more loans and deposits at microfinance institutions.

The small-scale lenders also credit the boost in Cambodia’s agro-industry for declining non-performing loans rates.

“We see that political stability and our economy are offering a strong climate for opening businesses or enlarging the businesses, leading to more demand for loans,” said Sathapana Microfinance Chief Executive Officer Bun Mony. “We don’t have any major challenges, as our performance has improved after being hard hit by the crisis.”

The MFI’s lending totalled $51 million to 4,900 borrowers at the end of June, whiles its NPL rate declined to 0.7 percent from 0.9 percent at the end of December 2010.

The firm’s deposits had also increased to about $10 million by the end of June. Sathapana was the first MFI to receive a deposit licence from the National Bank of Cambodia in 2009.

MFIs contribute significantly to the country’s macroeconomic stability, particularly by increasing rural income via lending, said Cambodian Economic Association President Chan Sophal

“It is quite necessary for our people to have access to more fund via MFIs while our economy is growing,” he said.

NPL rates had dropped over the past several years, leaving the industry in a much better situation, he said.

However, he added the industry needs to improve its human resources in order to develop further. Cambodia’s other large MFIs expressed similar optimism about the industry.

Hattha Kaksekar Limited has seen a 35 percent increase in loans and a 60 percent increase in deposits over the first six months of 2011 to $56 million and $9 million respectively, said its General Director Hout Ieng Tong.

“I think our economy has bounced back,” he said, adding the MFI was seeing particular activity in tourism and agriculture. Growth in deposits came through Hattha Kaksekar efforts to offer higher interest rates than many, he said.

Prasac CEO and President Sim Senacheert wrote that its loan portfolio had increased by about 63 percent in the first half compared year on year, totalled $122 million. Its NPL rate had also decreased to 0.8 percent, from 1.44 percent at the point last year, though he added more could be done to mobilise savings at the MFI.

Maxima Mikorheranhvatho MFI has seen its total loans increase by about 10 percent over the past six months, said CEO Uong King Seng.