A defining mark of any good economy is the ability of its regulatory bodies to keep tabs on the financial health of both its citizens and corporate bodies when granting loans.
In Cambodia, ensuring that money and finances are lent to the right individuals and business organisations is really important.
Thus, to close this gap, the information asymmetry, it is the responsibility of the Credit Bureau Cambodia (CBC) to provide reliable and accurate data in the form of credit reports to financial institutions.
CBC’s CEO, Oeur Sothearoath, told The Post that the Commercial Credit Reporting System under the CBC, was officially launched in July this year after having successfully developed it by the end of 2018.
“Lender institutions rely on commercial credit reports to assess the credit worthiness of a company.
“Having access to the system is the lifeline for a business. It will enable a business to obtain the capital needed to run a business successfully,” he said.
Having access to the capital markets like banks and financial institutions is vital to expand, cover day to day expenses, purchase inventory, hire additional staff and allows to conserve the cash on hand to cover the cost of doing business.
“With a strong business credit, you create a safety net for your business so you should have no trouble gaining access to the business funding you need.
“This enables you to gain access to the business funding you need, “ said Sothearoath.
According to Sothearoath, in the past, information in the commercial loan sector was scarce and not collated.
As such, data between financial institutions and the borrowers was lacking and this led to a delay before a full assessment of the potential borrowers could be made.
“By having the Commercial Credit Reporting System, financial institutions can close the information gap and improve the loan assessment while the corporate or companies can have full pictures of their credit worthiness and can access to finance faster, and this vital for proper functioning of any business,” he added.
All financial institutions licensed by National Bank of Cambodia are required to be CBC members and are required to provide 100 per cent of their loan information to the Credit Reporting System.
“All lenders provide their information at least on a monthly basis. Some lenders commit to provide on a weekly or even daily basis. Once they report that information, the bureau provides the data in the form of a credit report to the financial institution, company or persons who requested it,” he added.
Due to this, Sothearoath said that the reports could change every day in the credit reporting system as consumer open new loan accounts, repay loans or close accounts in the course of doing business.
“This collection alone changes the data in your files. Out of the 165 members, there are 60 financial institutions engaged in the commercial credit reporting platform as they have granted commercial loans and submit their customers’ information to bureau,” he added.
In general, the granting of credit depends on the confidence the creditor has in the borrower’s credit worthiness.
According to Sothearoath, the granting of credit depends on the confidence the creditor has in the borrower’s credit worthiness.
“It is vital that everyone is aware of the existence the Commercial Credit Reporting System. Over the last seven years, we noticed a significant change in this market. However, we are aware, financial literacy is an important part of the overall credit information system,” he said.