ABC, CMA take steps to help borrowers facing difficulties
ABC, CMA take steps to help borrowers facing difficulties
The Association of Banks in Cambodia (ABC) and the Cambodia Microfinance Association (CMA) have jointly announced collective measures to support borrowers facing difficulties in repaying loans. The move is aimed to ease customers’ cash flow difficulties and late repayment of loans to banks and financial institutions.
The two associations said in a statement on Friday that Cambodia’s economic growth would be around six percent in 2024, but there are people facing a number of challenges such as a tightening cash flow and difficulties in servicing loans.
As part of implementing the National Bank of Cambodia’s (NBC) instruction issued on August 21, 2024, on Capital Conservation Buffer Ratio, the reserve requirement rate in foreign currencies, the ABC and CMA encouraged members of both associations to make loan restructuring for customers in accordance with these conditions.
They asked members to examine the possibility of restructuring loans based on customers’ requests without any fees.
In case a customer has financial difficulties, or making late payments and wishes to repay a nonperforming loan, banks and financial institutions shall waive the penalty.
Customers’ credit information with the Credit Bureau of Cambodia does not automatically disqualify them from getting a new loan, they said, urging all members to closely cooperate with the Credit Guarantee Corporation of Cambodia (CGCC) and the SME Bank Cambodia to provide credit to all sectors that may need financing.
ABC and CMA also encouraged all member banks and microfinance institutions, leasing institutions, and rural credit institutions to implement these measures to alleviate the burden of clients experiencing cash flow issues and late loan repayments, read the statement.
“Both associations will closely monitor the implementation of these collective measures and continue to keep all members updated as needed. These collective measures shall be in place until further notice,” the associations said.
The NBC requested all banking and financial institutions to maintain a capital reserve ratio of 1.25 percent, and a reserve requirement rate of seven percent until December 31, 2025, to support the national economic growth.
According to a statement from NBC, the move aims to give institutions more room to extend credit while supporting the nation’s economic growth. It added that loans for customers who are experiencing temporary financial difficulties should be considered in accordance with the guidelines in a separate circular.
These measures were issued in the wake of Prime Minister Hun Manet’s instructions last Thursday asking the central bank to put in place appropriate mechanisms with banking and microfinance institutions to facilitate refinancing for customers.
These measures help indebted people to have cash on hand to support their daily lives after refinancing their loans, he said.
Loans increased by 2.6 percent year-on-year to $58.9 billion by June this year while customers’ deposits rose by 13.4 percent to $51.9 billion, according to NBC’s biannual report issued in July.
The loans were given to main sectors such as trade, housing, construction and real estate, agriculture, hotels and restaurants, and manufacturing, among others, it said.
Non-performing loans (NPLs) at the banks and the microfinance institutions are at controllable rates of 6.8 percent and 8.3 percent, respectively, it added.
Cambodia has 59 commercial banks, nine specialized banks, 87 microfinance institutions, and 115 rural credit institutions across the country, with 21.3 million deposit accounts and 4 million credit accounts, the report said.
