Financial institutions in Cambodia restructured some $4.2 billion in loans for 285,074 borrowers as of December 31 since the National Bank of Cambodia (NBC) on March 27 issued a circular on loan restructuring during Covid-19, the central bank said in its 2020 annual report.

The directive was issued to all banks and financial institutions to restructure credit for loans in four priority sectors – tourism, garments, construction, and transport and logistics, which NBC flagged as the most severely affected by the pandemic.

The circular aimed to maintain financial stability, support economic activity and ease the burden of debtors facing declining revenues during the ongoing Covid-19 outbreak. The directive will be implemented until mid-2021.

In Channy, president and group managing directors of ACLEDA Bank Plc, on January 27 suggested the government extend the directive to help customers who remain under Covid-19 duress, even with the availability of vaccines.

He said: “On behalf of the financial sector, I would like to request the government consider extending the time for loan restructuring to customers, as many businesses are still struggling to recover.”

Kaing Tongngy, head of Cambodia Microfinance Association’s (CMA) communications department, told The Post that members of his association – including four banks – restructured some $1.382 billion in loans for over 285,000 borrowers.

Noting a discrepancy between NBC and CMA data, he said his organisation includes statistics from leasing institutions and rural credit operators, while combining the four banks’ loan restructuring data.

“Covid-19 has had a negative impact on the microfinance sector, though that remains at a manageable level.

“Loan restructuring policy has eased the burden caused by Covid-19 on clients so that they can continue their livelihoods and make certain that their credit histories are not affected by the restructuring as they would under normal circumstances.

“More than half of loan restructurings were for small businesses whose incomes had been affected by the pandemic,” Tongngy said.

CMA notes significant improvements in the Covid-19 situation and the resumption of most daily economic activities, he said. With more viable vaccines available globally, the association is optimistic that the sector will return to normal this year.

“As a representative of the industry, CMA has been actively monitoring the trends and changes in the industry to prevent any potential risks facing the sector as a whole.

“CMA is also ensuring that our 112 members continue to provide the needed support to affected clients and helping them to resume or start their businesses during these recovery stages,” Tongngy said.

PRASAC Microfinance Institution Ltd executive vice-president and chief marketing officer Say Sony told The Post on January 27 that loan restructuring at his institution has been dropping.

He said: “Following NBC’s prakas, we’ve given priority to some sectors but have noticed the high restructuring rate for businesses related to tourism.

“The government, through NBC, released regulatory support that, above all, allowed financial institutions to focus on restructuring, and that has enabled us to help our clients in these tough times by extending their repayment terms, reducing monthly instalment payments or require them to pay only interest.”

“The number of applications for restructuring from our clients has been trending down now that they can restart their businesses and generate income to repay their loans following repayment schedules.

“This year we plan for 20 per cent growth, however, we have to work harder together with our clients to reach this goal because Covid is still here. While manageable, more cases are still being found.”

PRASAC’s total assets stand at $3.637 billion as of the end of last month, up 16.95 per cent from $3.110 billion on December 31, 2019.

Its loan portfolio grew 21.17 per cent year-on-year from $2.501 billion to $3.030 billion, while deposits surged 15.25 per cent from $1.788 billion to $2.061 billion.