The National Bank of Cambodia said it will release about 120 billion riel (about $30 million) for commercial banks and microfinance institutions to bid in the 19th liquidity-provided collateralised operation (LPCO).
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Bidding will be on April 24. Of the total, 40 billion riel or $10 million will be for LPCO maturities for three months. The same figure will be for maturities of six months and for a year.
The bank said there was no limit on the maximum bidding amount.
The NBC said interest on Negotiable Certificates of Deposit (NCDs) in dollar currency would be cut from five percent to three percent. NCDs are collateral for the LPCO.
Commercial banks and microfinance institutions have acquired more than 209 billion riel in riel liquidity, worth $52.4 million, from the bank since it began the LPCO in October 2016. The LPCO aims to boost the country’s riel liquidity.
NBC director-general Chea Serey said that the market KHR demand might increase to about 4000 billion riel ($1 billion).
She added that last month, the NBC created two additional LPCO maturities of three months and six months. Maturity refers to the period from the date of signature of the loan to the last payment of the principal. Maturity is the sum of grace and repayment periods
“The creation of new two additional maturities for the LPCO was to assist financial institutions in complying with the regulation that requires them to provide at least 10 percent of loans portfolios in riel currency as the deadline to fully comply with the requirement is set at the end of next year,” she added.
“For more than a year now through our surveys with banks and MFIs, we have learned that several financial institutions need different maturities, while a few others lack short-term liquidity and some others may need longer-term liquidity,” Ms Serey said.
“Therefore, to meet these different maturities needs, but also to allow the NBC to better absorb and reallocate the liquidity, the NBC decided to introduce two new maturities in addition to the current one.”