Logo of Phnom Penh Post newspaper Phnom Penh Post - National Bank of Cambodia slams NGOs’ lending report

National Bank of Cambodia slams NGOs’ lending report

Content image - Phnom Penh Post
The increasing levels of debt caused by taking loans from microfinance institutions (MFIs) is forcing rural families to sell off land, a report from Licadho and Sahmakum Teang Tnaut (STT) claimed. Post Pix

National Bank of Cambodia slams NGOs’ lending report

The National Bank of Cambodia (NBC) on Thursday slammed a report on predatory lending in the Kingdom by local human rights NGOs Licadho and Sahmakum Teang Tnaut (STT), which was released on Wednesday, as “flawed”.

The report, entitled Collateral Damage, claimed that increasing levels of debt caused by taking loans from microfinance institutions (MFIs) is forcing rural families to sell off their land.

The Cambodia Microfinance Association (CMA) said the report on predatory lending paints a distorted picture and ignores significant contributions to poverty alleviation and financial inclusion by MFIs.

On Thursday, NBC director-general Chea Serey said: “We have issued many rules and regulations on responsible lending and have taken an active role in promoting financial literacy to empower consumers.

“We agree with the CMA that there are flaws in the report. The practice cannot be generalised to the whole industry based on such a small sample size.”

While the NBC did not reject the report in its entirety, she stressed that: “The report’s claims do not reflect reality and needed to be reinvestigated.

“Nonetheless, this doesn’t mean that we will ignore the 28 [MFI clients interviewed for the report who were] affected if it is found to be true.

“We would appreciate it if the authors of the report and the organisations who compiled it would come forth with evidence of such practices so that we can take the necessary action.”

The findings were compiled from 10 communes in Kandal, Kampong Cham, Tbong Khmum and Prey Veng provinces, as well as Phnom Penh, with 28 MFI clients interviewed.

The CMA said with only 28 case studies presented out of close to two million loans currently on the books of the Kingdom’s MFIs, the report does not represent anything close to the full picture of MFI lending in Cambodia.

“The CMA takes reports of unethical or predatory lending practices very seriously and we will work with our members to investigate the case studies presented in the report.

“But we are extremely concerned that the report relies on such a small sampling of MFI borrowers in Cambodia and also that none of our members, or the association itself, was contacted by the report’s authors during the course of their work,” CMA chairman Kea Borann said.

The Cambodian microfinance sector has proven to be one of the most successful models for financial inclusion worldwide, said the CMA.

The World Bank’s Cambodia Microfinance Policy Note published in October states that growth in microcredit is having positive financial and welfare impact for households in Cambodia, said the CMA.

It said expansion of the microfinance sector has made it possible for borrowers to shift from informal to formal sources of credit, especially among the poor.

Licadho monitoring manager Am Sam Ath told The Post on Thursday that despite the small scale of the study, it presents evidence that should urge the government and MFIs to control lending and guarantee that it does not abuse human rights.

“The report is not suggesting that microfinance institutions stop lending to people. It just wants to ensure that lending is transparent and in line with the government’s development plans to eradicate poverty,” he said.

MOST VIEWED

  • ‘Education’ a priority traffic-law penalty

    A top National Police official on June 21 neither rejected nor confirmed the authenticity of a leaked audio message, which has gone viral on social media, on a waiver of fines for a number of road traffic-related offences. General Him Yan, deputy National Police chief in

  • Siem Reap’s $18M zoo said to educate public, help wildlife

    Angkor Wildlife and Aquarium Co Ltd has invested $18 million in a zoo in Siem Reap province, which will be opened in October to educate and promote animal conservation as well as attract national and international tourists. Currently, the Angkor Wildlife and Aquarium is building the

  • Volunteer scheme to foster ‘virtuous’ humanitarian spirit

    A senior education official said volunteer work contributes to solidarity and promotes a virtuous humanitarian spirit among the youth and communities. Serei Chumneas, undersecretary of state at the Ministry of Education, Youth and Sport, made the comment during the opening of a training programme called “

  • Chinese firms unveil preliminary results on metro, monorail for capital

    Minister of Public Works and Transport Sun Chanthol and representatives from China Road and Bridge Corp (CRBC) and its parent company, the state-owned China Communications Construction Co Ltd (CCCC), met on June 24 for talks on results of the firms’ preliminary study on a potential metro

  • ACLEDA, WU to enable global money transfers

    Cambodia's largest commercial bank by total assets ACLEDA Bank Plc and global money transfer firm Western Union (WU) have partnered to offer customers cross-border money transfers to 200 countries via “ACLEDA mobile” app. In Channy, president and group managing director of ACLEDA, said the June 22 agreement

  • Aeon, Micromax partner again for third mall

    AEON Mall (Cambodia) Co Ltd and a locally-owned Micromax Co Ltd have entered into a partnership agreement to develop fibre optic infrastructure for $200 million Aeon Mall 3, which is expected to be opened in 2023. The agreement was signed on June 20 between Masayuki Tsuboya, managing director of