Singapore-based Phillip Bank announced yesterday that Cambodian borrowers that can prove a consistent monthly income will be able to access lines of credit without putting down collateral.

The bank, which recently formed a lending partnership with New Union (Cambodia), a branch of a Singaporean credit data analysis company, aims to tap into the growth of borrowing demands.

Han Peng Kwang, general manager of Phillip Bank, explained that while many people have the ability to pay back loans, borrowers are restricted from accessing lines of credit due to collateral requirements.

With a collateral-free credit product, he hopes that this will provide the opportunity to capitalise on consumer’s abilities to make regular repayments.

“No other bank in Cambodia is offering this product at this time, which is why we think it is the right time to introduce it,” he said.

“We understand that it is risky,” he said, adding that the two companies had adequately studied the market.

According to Kwang, Philip Bank has set aside $3 million in capital reserves for lending, and will provide cash-based loans with a monthly interest rate of 2 per cent. Loans start at $1,000 and are capped at three times a borrower’s monthly income.

Besides offering this product, the bank plans to increase its loan budget dependent on market forces as well as looking at lending products beyond those used to meet everyday needs.

Poh Wen Yi, managing director for New Union (Cambodia), said that the company will collect and analyse credit data supplied by customers to ensure that borrowers have the financial ability to make the monthly repayments.

“More data allows us to have a more accurate risk analysis,” he said. “A more accurate risk analysis means that it will be easier for lenders to grant loans of significant size.”

As of the end of May, Phillip Bank had broken even with approximately $90 million in both outstanding loans and bank deposits.

So Phonnary, executive vice president of Acleda Bank, countered that the model of lending loans without collateral for an amount below $3,000 was nothing to the Kingdom’s array of financial products. She said that the lending risk was limited if banks took adequate precautions and examined spending behaviours.

“Some borrowers that don’t have home or land titles have been taking out loans from us up to nearly 20 times already,” she said, adding that with continued lending “we can evaluate behaviour, income and actual repayment ability”.