Cambodian Microfinance Association (CMA) has welcomely responded to the request of the National Bank of Cambodia to all banks and microfinance institutions to defer loan payments for their customers during the Covid-19 pandemic.
Cambodian Microfinance Association (CMA) has welcomely responded to the request of the National Bank of Cambodia to all banks and microfinance institutions to defer loan payments for their customers during the Covid-19 pandemic.
On April 20th, the National Bank issued a new request to private banks and microfinance institutions to ease customers’ burdens on relevant credit services and to lift fines on late payments from now until the end of December 2020.
The National Bank stated that “during the Covid-19 crisis the world and Cambodia are facing, the National Bank has made a request to all banks and microfinance institutions in the country to help its customers in the hardship.”
The National Bank began to take measures for banks and microfinance institutions to prevent negative effects caused by the spread of Covid-19 starting from the 5th of March. The National Bank of Cambodia released a further circular to enforce credit policy amendments and to clearly determine, prioritize, and support which customers are mostly affected by Covid-19.
In a response to the new appeal by the National Bank of Cambodia, Mr. Phall Vandy, Executive Director of the CMA, told FOCUS on April 27th that the Association has called for its members to help customers relative to their current situation resulting from Covid-19. The Association also held a meeting with its members on the implementation of the National Bank’s new policies and notices and the continued payment of attention to customer’s issues. They will continue to back their members to ensure the plans of business continuity, as well as check measures to prevent the negative impacts on the financial sectors.
Mr. Phal Vandy also added that “most members have agreed on the new credit policy to help the most affected customers by the virus; however, some members still follow their own policy as their customers have been less affected and did not seek for the adjustment.”
Data from the Cambodian Microfinance Association showed that by the end of 2019 all microfinance institutions had provided over 7 billion dollars in credit to approximately 2.2 million Cambodians, of which 80% are women. The credits include 35% for family credit, 20% for agriculture credit, 18% for business credit, 14% for service credit, 6% for transportation credit, and 3% for construction credit, with other credits making up the remaining 4%. The data also indicated the institutions received total deposits of around 3.6 billion dollars from 2.7 million depositors at 1,400 locations nationwide, which are home to about 34,000 employees.
Similar to the CMA’s data, 2019 year-end reports from the International Monetary Fund showed about 2 million Cambodians are using banking services for saving and running business in the future.
Concerning the estimated impacts on Cambodian financial institutions due to Covid-19, the CMA’s Executive Director said “we cannot estimate the effects on the whole sector at this stage. Covid-19 is a universal issue resulting in the inevitability of the effects on microfinance sectors in Cambodia; however, the situation is under control. By April 24th, the situation remains normal, and lending and deposit facilities are still provided to the people.”
Cambodia’s Prime Minister Hun Sen called for all banks and financial institutions to exempt interest or delay payments’ date for their customers, in particular suspended garment workers due to Covid-19. He also requested house sellers to defer payments to garment workers, hotel employees, and workers in tourism sectors during the suspension period.
