The National Bank of Cambodia on Tuesday warned the public of the dangers of low-interest loans being offered by unscrupulous companies.
Chea Chanto, governor of the National Bank of Cambodia, said on Tuesday during a promotion ceremony for an NBC director that moneylenders are targeting consumers by offering them low-interest loans before suddenly increasing the interest rate.
“After they cheat people, they tend to escape,” he said. “It is illegal and makes for big losses, so please be careful.”
“No one in any country in the world would give such a loan like that, that’s complete cheating,” he added.
Kea Borann, president of the Cambodia Microfinance Association, said that people should be wary of such loans.
He said that last year alone, there were a number of cases where moneylenders were promoting zero-interest loans on social media.
“Nowadays, there are plenty of loans being offered – trying to lure in consumers,” he said. “But once they take the money, suddenly their interest rate jumps 50 percent.”
Mr Borann said that his organisation will gradually educate the public about the dangers of offers that are too good to be true.
“Now we are trying to explain to them the difficulty of getting a loan – what is legal, what is illegal, what’s licensed by us and what is not,” he said.
Last month, the NBC called for citizens to exercise caution when dealing with online and mobile lending companies, as many of these lenders are not authorised.
“The companies do not have a consumer protection or protection principle for debtors, unlike the legitimate companies that have been approved by the bank, so people should be careful about dealing with these companies,” said Kith Sovannarith, deputy director-general of banking supervision at the NBC.
In 2017, the NBC estimated that 1.7 million Cambodians took out loans with a micro-financing institution.