Logo of Phnom Penh Post newspaper Phnom Penh Post - MFI deposits double in 2014

MFI deposits double in 2014

A customer service employee
A customer service employee finalises a transaction at a microfinance institution in Kampong Speu province in December. Hong Menea

MFI deposits double in 2014

The total amount of savings at Cambodia’s deposit-taking microfinance institutions (MFIs) reached $897 million by the end of 2014, more than doubling from its 2013 base of $445 million, according to figures from the Cambodian Microfinance Association (CMA).

Of the 39 MFIs operating in Cambodia, seven have gained licences to accept deposits since a law was passed in 2007 allowing the practice.

CMA president Bun Mony said the boost in deposits reflected the positive performance of the Kingdom’s economy, especially in rural areas where most of the MFI’s clients are located.

“Our operating capacity is now similar to banks, or even better than some banks,” he said, adding that major MFIs now offer financial products and services such as ATMs, internet banking and mobile banking.

“The value of assets at some major MFIs and the services on the offer are now much better [than some banks] and these build trust with our customers.”

According to Mony, deposits collected from the Phnom Penh area represented about 30 to 40 per cent of all MFI savings, with the rest coming from the country’s provinces.

Prasac is the largest MFI with deposits worth $305 million, followed by Hattakasekar Limited (HKL) at $173 million, Sathapana Limited at $166 million, and Amret at $153 million.

The three remaining MFIs – AMK, Credit, and VisionFund – received less than $40 million each.

The average interest rate on a six-month deposit at a bank is about 4 per cent, while the average rates on offer at MFIs, over the same period, is about 6.5 per cent.

Prasac CEO Sim Senacheert said that one of the main reasons behind the boom was MFIs offering a higher savings rate than banks.

“People know that we are a place that can ensure security for their money,” he said, adding that there is increasing public confidence in MFIs while their financial products have become far more developed.

“We can now complement the banking system by providing banking services in areas where banks have not been available before.”

By the end of last year, MFIs installed a total of 204 ATMs across the country, a number expected to reach 334 by the end of this year.

The amount of money deposited in Cambodia’s MFIs stood at 44 per cent of the $2.03 billion total loaned by the end of 2014, according to the CMA.

At Acleda Bank, which started out as a microfinance institution but made the transition to commercial banking in 2003, competition from MFIs is not a worry.

Rather, it reflected Cambodians’ increasing access to various forms of finance, said Acleda CEO In Channy.

“We want more people putting their money in banks and MFIs so that we can use locally-sourced funds to provide loans to Cambodians,” he said.

“Until now, local funds have not seen their full potential yet.”

MOST VIEWED

  • Chinese group tours return to Cambodia starting Feb 6

    Cambodia is among 20 countries selected by Beijing for a pilot programme allowing travel agencies to provide international group tours as well as flight and hotel packages to Chinese citizens, following a three-year ban. As the days tick down until the programme kicks off on February 6,

  • Capital-Poipet express rail project making headway

    The preliminary results of a feasibility study to upgrade the Phnom Penh-Poipet railway into Cambodia’s first express railway indicate that the project would cost more than $4 billion and would take around four years to complete. The study was carried out by China Road and

  • Thai boxers to join SEA Games’ Kun Khmer event

    The Cambodian SEA Games Organising Committee (CAMSOC) – together with the Kun Khmer International Federation (KKIF) and Khmer Boxing Federation – have achieved a “great success” by including Kun Khmer in the upcoming biennial multi-sports event on its home soil for the first time, said a senior

  • Bullets to bracelets: Siem Reap man makes waste from war wearable

    Jewellery is often made from valuable gemstones like emeralds or diamonds and precious metals like gold or silver, or valueless things like animal horns. But a man in Siem Reap has approached the manufacture of delicate pieces from a different angle. His unique form of

  • Second Hungary business forum set for H2

    Cambodia has asked Hungary to provide GSP- (Generalised System of Preferences) Plus facilities for when the Kingdom sheds its least-developed country (LDC) label, as the two countries prepare to hold a second business forum in the second half (H2) of this year to expand trade

  • 61% of 2022 imports came from just 3 markets

    The three largest exporters to Cambodia – mainland China, Vietnam and Thailand – accounted for 60.94 per cent of the Kingdom’s total merchandise imports last year, at $18.245 billion, which was up 11.99 per cent over 2021, according to the General Department of Customs and Excise. Cambodia’s total imports