Central bank takes action against wayward lending firms

17 Jul 2018  2045 | Cambodia Travel News

People go in and out of the building of the National Bank of Cambodia in Phnom Penh. KT/Fabien Mouret

The National Bank of Cambodia (NBC) is working with the General Commissariat of National Police to stop the operations of unofficial lending operators that engage in unethical practices.

Chea Serey, NBC’s director general, said a number of unregistered microfinance institutions (MFIs) have been providing loans without clearly explaining to borrowers the repayment conditions, including the interest rate charged.

“The way they disburse loans is unethical. The companies continue to seize customers’ property and charge high interest rates,” she said.

In the first half of 2018, NBC terminated the licenses of 50 rural credit operators in the Kingdom for failing to comply with the rules and regulations of the central bank.

“First, we will take action against those unofficial lending companies, operators and unregistered MFIs that are not properly controlled or are not registered with NBC.

“Then we will raise awareness among the people on their obligations to pay back the loans. This will be part of our efforts to promote financial services and MFIs services in urban areas as well as in the provinces.

To boost awareness of financial matters and help citizens avoid undesirable lenders, the central bank is working on embedding financial literacy in the national curriculum from grade one to 12, she explained.

“We will officially launch a financial literacy subject at schools throughout the nation in 2019,” Ms Serey said.

Chea Phallarin, CEO of Amret Microfinance Institution and member of the board at the Cambodia Microfinance Association (CMA), told Khmer Times that he welcomed NBC’s stance against unregistered MFIs, explaining that the central bank’s approach is helping protect the image and reputation of the MFI sector as a whole.

It will also protect customers against unscrupulous lenders and boost the quality of lending services in the nation, he said.

“There are a lot of such companies providing loans in the Cambodian market. Most of them are registered with the Ministry of Commerce, but they have failed to register with the NBC,” Mr Phallarin said.

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