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Microfinance lenders see the amount of borrowers decrease in Q3

A woman conducts business at Prasac Microfinance Institution, the country’s largest MFI, in Phnom Penh.
A woman conducts business at Prasac Microfinance Institution, the country’s largest MFI, in Phnom Penh. Pha Lina

Microfinance lenders see the amount of borrowers decrease in Q3

The number of borrowers from microfinance institutions (MFIs) decreased by 5 percent during the third quarter of this year compared to the same period last year, a trend that industry insiders claim is due to operators attempting to strengthen the quality of their loans and to the impact of the 18 percent interest rate cap.

According to data from Cambodia Microfinance Association (CMA), the number of borrowers from 66 local MFIs reached a total of 1.84 million clients by the end of September this year, down from 1.94 million clients compared to the same period in 2016.

CMA data showed that portfolio at risk (PAR), the indicator for non-performing loans, amounted to $76 million by the end of September, equal to 1.9 percent of the sector's total outstanding loan portfolio. By the end of September last year, PAR was valued at $39 million, or 1.38 percent, of the total outstanding loan portfolio.

Sok Voeun, CEO of LOLC (Cambodia), said that the decrease of borrowers could be caused by three main factors including a lower demand of loans from clients, operators strengthening loan quality and reducing the amount of small loans disbursed to activate the 18 percent interest rate cap.

Updates to follow.

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