Logo of Phnom Penh Post newspaper Phnom Penh Post - Refinancing applications drop sharply

Refinancing applications drop sharply

Content image - Phnom Penh Post
The National Bank of Cambodia (NBC) late in March issued a directive to all banks and financial institutions – including microfinance institutions (MFIs) – to restructure credit for loans in four priority sectors. Hong Menea

Refinancing applications drop sharply

The number of loan restructuring applications has seen a steep drop over the last three months in an encouraging sign of Covid-19’s loosening grip on the Kingdom, the Cambodia Microfinance Association (CMA) said.

The National Bank of Cambodia (NBC) late in March issued a directive to all banks and financial institutions – including microfinance institutions (MFIs) – to restructure credit for loans in four priority sectors.

The move was a bid to maintain financial stability, support economic activity and ease the burden of debtors facing declining revenues during Covid-19.

The four priority sectors cited by the NBC were garments, construction, logistics and transport (with emphasis on taxi and tuk-tuk drivers).

Between March 1 and August 9, 266,818 clients affected by Covid-19 had applied for credit restructuring from MFIs, CMA head of communications Kaing Tongngy said. Of the number, 250,905 or 90 per cent were approved for $1.23 billion.

But he noted that the number of applications steadily declined to a weekly average of 20,000 in April-May and 10,000 in May-June.

Tongngy predicted a further contraction to 2,000-3,000 by the end of this week.

“We can conclude that the impact of Covid-19 has significantly ebbed, and some customers have even asked to pay principal and interest as they had done in the past,” he said.

Vithey Microfinance Plc CEO Bun Mony told The Post on Thursday that his MFI has also seen a downtick in the number of loan restructuring applications in recent months.

Since last month, he said, his institution had disbursed an average of between $100,000 and $150,000 per month, having been unable to do so just months before at the apex of the Covid-19 crisis.

“We now have a lot of new customers coming in and borrowing money from our institution to expand operations and start new businesses, so we can disburse capital steadily from now on,” Tongngy said.

The PAR30+ ratio of the microfinance sector increased from one to two per cent during Covid-19, which he said was not at alarming levels.

By the second quarter of 2020, 2,186,143 clients had outstanding loans from MFIs, leasing companies and rural credit operators to the tune of $7.262 billion, while a total of 2,870,223 depositors had deposited $3.618 billion, according to data from the CMA.

MOST VIEWED

  • Wing Bank opens new branch in front of Orkide The Royal along Street 2004

    Wing Bank celebrates first anniversary as commercial bank with launch of brand-new branch. One year since officially launching with a commercial banking licence, Wing Bank on March 14 launched a new branch in front of Orkide The Royal along Street 2004. The launch was presided over by

  • Girl from Stung Meanchey dump now college grad living in Australia

    After finishing her foundational studies at Trinity College and earning a Bachelor’s degree from the University of Melbourne in 2022, Ron Sophy, a girl who once lived at the Stung Meanchey garbage dump and scavenged for things to sell, is now working at a private

  • Ministry using ChatGPT AI to ‘ease workload’; Khmer version planned

    The Digital Government Committee is planning to make a Khmer language version of popular artificial intelligence (AI) technology ChatGPT available to the public in the near future, following extensive testing. On March 9, the Ministry of Post and Telecommunications revealed that it has been using the

  • Wat Phnom hornbills attract tourists, locals

    Thanks to the arrival of a friendly flock of great hornbills, Hour Rithy, a former aviculturist – or raiser of birds – in Kratie province turned Phnom Penh tuk tuk driver, has seen a partial return to his former profession. He has become something of a guide

  • Ministry orders all schools, public and private, to close for SEA Games

    From April 20 to May 18, all public and private educational institutions will be closed to maintain order and support Cambodia's hosting of the 32nd SEA Games and 12th ASEAN Para Games, said a directive from the Ministry of Education, Youth and Sport. Cambodia will host the

  • Almost 9K tourists see equinox sunrise at Angkor Wat

    Nearly 9,000 visitors – including 2,226 international tourists – gathered at Angkor Wat on March 21 to view the spring equinox sunrise, according to a senior official of the Siem Reap provinical tourism department. Ngov Seng Kak, director of the department, said a total of 8,726 people visited Angkor Wat to