One of the Kingdom’s largest microfinance institutions (MFI), Prasac MFI, increased its paid up share capital by $29 million in a bid to increase public confidence and comply with the National Bank of Cambodia’s (NBC) requirements.
Sim Senacheert, president and CEO of Prasac, told Khmer Times last week that the MFI had received approval from the NBC to increase its registered share capital from $72 million last year to $110 million this year.
“We got approval from the National Bank of Cambodia in the middle of July to increase our registered share capital to better serve our customers and increase our liquidity. This will put us in a stronger position and also enable the public to trust us even more,” said Mr. Senacheert.
Mr. Senacheert added that funds to increase Prasac’s paid up capital came from the company’s retained earnings last year that was approved by shareholders.
In March, the NBC said it was doubling minimum capital requirements for banks and sharply increasing those for MFIs to strengthen the rapidly expanding finance sector. The announcement was made in a prakas, or directive, issued by the NBC.
According to the prakas, deposit-taking MFIs were required to increase reserves to $30 million, up from $2.5 million now, while other MFIs had to increase their reserves to $1.5 million, up from $62,500. The MFIs had two years to raise their minimum capital requirements, read the parkas.
Chea Serey, director general of the NBC, pointed out that most MFIs in Cambodia began from small NGOs with a social mission. This was factored into minimum capital requirements at the time, she said, adding that the NBC also avoided over burdening MFIs with excessive regulatory costs.
“However the MFI landscape now is completely different. Now it constitutes 20 percent of the banking sector and is growing rapidly,” Ms. Chea Serey said, adding that the customer base of MFIs was expanding.
Mr. Senacheert said Prasac had, since last year, exceeded the requirements set by the NBC as its paid up share capital was already at $72 million.
“The prakas is not a problem for us. Now, our registered share capital is at $110 million, which means we are able to increase our paid up capital to reach that amount,” he said.
As at June, Prasac’s outstanding loans, to more than 32,000 customers, reached $863 million while deposits were around $560 million. Deposits grew by 16 percent compared to the same period last year.
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