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NBC rolls out third-phase debt relief measures

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The central bank said it will maintain the reserve requirement ratio (RRR) at seven per cent until further notice, and continue its loan restructuring scheme until December 31. NBC

NBC rolls out third-phase debt relief measures

The National Bank of Cambodia (NBC) has rolled out a third phase of debt relief measures aimed at giving financial institutions (FI) an extra boost, enabling them to inject more loans to spur economic activity as the Kingdom struggles to rein in the February 20 community outbreak of the novel coronavirus.

The measures will “support the Royal Government's policy in addressing the challenges of, and alleviating the burden for the people affected by Covid-19”, the central bank said in a press release.

The central bank said it will maintain the reserve requirement ratio (RRR) at seven per cent until further notice, and continue its loan restructuring scheme until December 31.

RRRs are central bank regulations that set a minimum amount of cash that FIs must hold in reserve. The Cambodian RRR in foreign and domestic currency were 12.5 per cent and eight per cent, respectively, until the NBC reduced both to seven per cent in March last year.

The NBC said clients in areas cordoned off due to Covid restrictions may restructure their loans as many times as needed – removing a three-time limit. The central bank encouraged FIs to mull over reducing or waiving fees or penalties on a case-by-case scenario.

The Ministry of Health on May 24 reported another 556 Covid-19 cases – all but 16 of which were linked to the February 20 community outbreak – three new deaths and 658 recoveries. To date, Cambodia has recorded a total of 25,761 Covid-19 cases, with 18,359 recoveries and 179 fatalities.

Acleda Bank Plc president and group managing director In Channy welcomed the move, saying it will provide more space for FIs to provide more loan restructuring options and other forms of support to clients during these trying times.

He told The Post on May 24: “We are delighted that the NBC has extended the loan restructuring to the end of this year. With the extension, we can continue to support our customers in these difficult times that are weighing on all industries, including ourselves, the banks.

“The extension of the reserve requirements enables banks with liquidity not only to support its customers but also prop up economic growth and recovery.”

Prasac Microfinance Institution Ltd senior vice-president Say Sony also pointed out the indispensability of the NBC's move to better equip industry to fuel economic activity.

“Thanks to NBC for its thorough understanding of clients' needs during these hard times. Through these debt intervention tools, clients can seek to restructure their loans more than three times, up until December 31, 2021.

“Prasac is thrilled to join hands with the government to carry out all measures issued by all regulators, as well as NBC, in full and relieve clients of their afflictions.

“Seeing the need for more funds to restart businesses as well as for working capital, and with agriculture production season beginning, we'll keep lending money where there is need,” he said.

As of May 19, Prasac has restructured loans for about 48,000 borrowers, while maintaining a 98-99 per cent repayment rate, according to Sony.

Total assets in the Kingdom's banks and microfinance institutions (MFI) grew to $59.4 billion at the end of last year, increasing 15.7 per cent from the end of 2019, according to NBC's 2020 annual report.

Outstanding loans in banks and MFIs grew by 14.8 per cent to $37.3 billion by the end of last year, while deposits increased by 15.4 per cent to $33.8 billion.

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