Cambodia's largest microfinance institution Prasac has raised its registered capital from $110 million to $168 million, an amount five times larger than the National Bank of Cambodia’s (NBC) requirement.
A prakas by the NBC requires microfinance deposit-taking institutions (MDIs) like Prasac to maintain at least $30 million in registered capital.
Prasac Microfinance Institution Ltd senior vice-president Say Sony told The Post on Wednesday that Prasac’s proposal to increase its registered capital was approved by the NBC on December 31 and by the Ministry of Commerce on Tuesday.
Sony said the increase in registered capital proves that Prasac can grow its business in terms of quantity, quality and efficiency.
“We consider this a great milestone and a great start to 2019. The increase in registered capital shows shareholders our commitment to support the NBC’s objectives – to strengthen financial regulations and prudential requirements,” Sony said.
He said at the end of last year, Prasac’s assets totalled $2.37 billion. Its outstanding balance amounted to $1.96 billion while deposits totalled $1.29 billion.
At the end of last year, Prasac installed more than 126 ATMs, 498 points of sale systems and saw 11,200 registered mobile banking users.
On March 2016, the NBC issued a prakas, requiring financial institutions to raise their minimum capital to operate in the Kingdom.
It requires all commercial banks, including subsidiaries of foreign banks, to increase their minimum capital to the equivalent of $75 million.
Specialised banks are required to raise their minimum capital to $15 million from $7.5 million, while MDIs had to raise their minimum capital to $30 million from $2.5 million.
Cambodia Microfinance Association executive director Yun Sovanna said on Wednesday that the increase of Prasac’s registered capital is warranted given that the financial firm has grown rapidly.
He said once a financial institution grows through bigger loans and deposits, it begins to see risks. He said the firm’s decision to increase its capital far greater than the central bank’s requirements proves that is has a strong commitment to maintaining financial health and ensuring public confidence.
“When financial institutions grow, they always want to offer comprehensive financial services,” he said, adding that operators may view staying as an MDI or MFI might limit their ability to offer services.
“In general, MFIs and MDIs always have the ambition to transform themselves to a [bank] so they can offer comprehensive financial services.”