ABC, CMA take steps to safeguard consumers
ABC, CMA take steps to safeguard consumers
The Association of Banks in Cambodia (ABC) and the Cambodia Microfinance Association (CMA) have started implementing new rules for their member institutions to ensure a sustainable and highly responsible banking and financial sector with robust consumer protections.
According to a joint statement last Friday, henceforth, banking and financial institutions are prohibited from accepting certain types of collectively owned land as collateral for new loans.
In case institutions are holding those types of lands as collateral already, they should never use coercive sales methods or encourage customers to sell those lands. Title deeds submitted as collateral for loans must be returned to customers after the loan repayment is completed, it added.
It is also strictly forbidden to accept personal identification documents, including National Identity Cards, family books, residence books, passports, birth certificates, and equity cards (ID Poor) as collateral.
When providing loans to households holding equity cards (ID Poor), banks and financial institutions need to conduct a thorough and accurate assessment of the borrower’s ability to repay the loan.
To promote financial inclusion of individuals and communities utilizing collectively owned land, such as state private land and publicly registered state land, ABC and CMA encouraged member institutions to continue providing credit to these borrowers through unsecured lending approaches.
“The two associations have reiterated that the above-mentioned rules are the additional mechanism to the existing mechanism to ensure that the banking and financial sectors remain resilient, stable, responsible and protective of the customers,” read the statement.
It is to be noted that the banking and financial industry continued the modest growth in both loans and deposits in the first half of 2024.
Outstanding 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 the biannual report of the National Bank of Cambodia.
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 four million credit accounts, the report said.
