Logo of Phnom Penh Post newspaper Phnom Penh Post - Banks urged to defer loans




Banks urged to defer loans

Content image - Phnom Penh Post
Workers around the country are struggling to pay back loans amidst Covid-19 layoffs.

Banks urged to defer loans

Fourteen trade unions submitted a petition to the Council of Ministers and the Prime Minister’s Cabinet on Wednesday, requesting all banks and microfinance institutions (MFIs) to temporarily suspend repayments, including interest, for workers suffering financially during the Covid-19 pandemic.

The petition states: “Due to the spread of Covid-19, labour has been suspended in garment factories, hotels, clubs, entertainment services, the transport industry, construction, agriculture and other sectors in Cambodia, causing workers to lose their daily income.”

Cambodian Labour Confederation (CLC) president Ath Thorn told The Post that the unions submitted the letter because out-of-work employees are unable to pay their debt during the spread of Covid-19.

“They will face increased loan repayments to banks and microfinance institutions from April onwards, and those working in factories and hotels have complained they cannot afford to pay the bank,” he said.

Acleda Bank Plc president and group managing director In Channy told The Post on Wednesday that all banks in Cambodia are following the directive of the National Bank of Cambodia (NBC) for settling debts, which includes not seizing workers’ assets during the pandemic.

The NBC also instructed banks and MFIs to implement “credit restructuring” measures to ease the burden on borrowers in the face of income losses.

Besides, the NBC recently issued a prakas on easing the reserve requirement ratios of banks to provide sufficient resources to support credit growth.

Channy said: “The above-mentioned measures are adequate. I don’t think there is a need to send any petition to Prime Minister Hun Sen because we are following the NBC’s directive.”

He said Acleda Bank has provided 295 loans to workers and their families worth more than $1 million, and that families which took agricultural loans should have no repayment problems.

“Their business is still operating as usual because it hasn’t been affected by the spread of Covid-19,” he said.

Vithey Microfinance Plc CEO Bun Mony told The Post that MFIs will also be taking part in the implementation of the NBC’s measures to deal with favourable debt repayments during the period.

However, he said, MFIs have a heavy burden of debt repayment to creditors because their capital investments are financed by loan repayments.

“Of course, the money we lend to the borrower, we borrow from others. So far, no one has applied for a deferred payment because their business hasn’t been affected yet. Most of our loans are in the agricultural sector,” he said.

In the garment industry, temporarily laid-off workers suffered another financial hit on Tuesday when Hun Sen said instead of earning 60 per cent of the minimum wage per month, they will now receive a flat amount of $70 monthly.

Watch video:

MOST VIEWED

  • China and India closer to ‘biggest’ showdown

    Indian and Chinese troops remained engaged in an eyeball-to-eyeball situation in several disputed areas along the Line of Actual Control (LAC) in Eastern Ladakh on Thursday, signalling that the confrontation could become the biggest military face-off after the Doklam episode in 2017. Ladakh is a union

  • Central bank to shun small US banknotes

    The National Bank of Cambodia (NBC) is considering not accepting smaller denominated US dollar banknotes – $1, $2 and $5 – from banks and microfinance institutions (MFIs) which it said are flooding its stockpile as the demand for those notes is low. While some banking insiders welcomed the move as

  • PM lauded in Covid-19 fight

    World Health Organisation (WHO) director-general Tedros Adhanom Ghebreyesus sent a letter to Prime Minister Hun Sen thanking him for following the WHO’s guidance and commending Cambodia’s efforts in the fight against Covid-19. In his letter made public by the Ministry of Foreign Affairs

  • Workers return, hope for salaries

    More than 600 factory workers in the capital’s Chaom Chao commune in Por Sen Chey district returned to work after the factory’s owner promised to pay their salaries in instalments until the middle of next month. On Tuesday and Wednesday, more than 600 workers gathered

  • Women detained for forcing kids to beg

    Two women were sent to Phnom Penh Municipal Court on Thursday for forcing six children to beg for money for several months at the Chhouk Meas market in Krang Thnong commune in the capital’s Sen Sok district. Phnom Penh Department of Anti-human Trafficking and

  • Vietnamese tents baffle border guards

    Kandal and Takeo provincial authorities bordering Vietnam have expressed concern after witnessing irregularities by the Vietnamese authorities, including the deployment of soldiers to erect 114 camps just 30m from the border. Takeo provincial governor Ouch Phea told The Post on Thursday that Vietnamese soldiers had erected 83