Larger bank moves in on microfinance sector
Larger bank moves in on microfinance sector
ACLEDA Bank Laos, which is a Lao-Cambodian joint venture, is moving to increase its presence in the microfinance sector after receiving international grant funding towards making finance available to small business in Laos.
This year the bank plans to issue loans of 487.9 billion kip (about US$60 million) for members of the community, with a major focus on family businesses and small and medium d enterprises.
ACLEDA Bank is continuing to expand its presence in the small and microfinance sector after signing an agreement for 3 million euro in grant funding with the Ministry of Finance and the German government development arm KfW in March last year.
Some other players in the sector have expressed concerns that the smaller microfinance institutes will suffer negative impacts as a result but these concerns have been dismissed by ACLEDA management.
The bank's CEO and Managing Director Mr Narin Phon told Vientiane Times that it is a free market in the banking and microfinance sectors and everyone will benefit from increased options and competition.
Mr Narin confirmed the bank will charge customers 19 percent interest on the small loans, as defined by conditions of bank op eration set out by the Bank of Lao PDR.
Although the bank held less in deposit accounts compared to other larger commercial banks, it wouldn't face financial problems because the bank received money from international financial organisations to issue more loans, he confirmed.
Mr Narin said ACLEDA had given loa ns for various businesses, with 50 percent of loans focused on small and medium d enterprises and personal loans.
The bank disburses loans from less than one million kip up to 60 million kip for small and medium d enterprises and personal loans and up to one billion kip for larger businesses and projects.
“Based on the Bank of the Lao PDR's regulations, we have to disburse loans in foreign or Lao currency depending on which currency the customer earns,” Mr Narin explained. “However, about 70 percent of loans are in Lao currency.”
Despite its expansion plans, the bank will still face challenges in term of human resource capacity because of inadequate staff numbers to offer services for customers, especially in some remote areas.
“The bank currently has about 200 loan staff so we need an additional 100 staff or more to offer services,” Mr Narin said. This may cause the bank some difficulties in achieving its targets this year, he commented.
Small loans will give opportunities for everyone, especially small and medium d enterprises to expand their business ahead of the coming of Asean Economic Community at the end of this year,” Mr Narin said.
