As COVID-19 continues to carve out a path of economic destruction in the Kingdom, several financial institutions are considering re-classifying their loan-repayment structures to help relieve customers in fiscal trouble, in line with recent guidelines released by the National Bank of Cambodia.
Mar Amara, executive vice president and group chief financial officer of ACLEDA Bank, told Khmer Times that the financial institution is following the central bank’s guidelines and will seek solutions for their customers if needed.
She said that as per NBC’s guidelines, ACLEDA will focus mainly on customers most affected by COVID-19 in the four sectors including Tourism (hotels, guesthouses, restaurants and support services for these industries), Garments (including employees of garment factories), Construction (only for first home or shop-construction loans and first home loans), and Transportation (especially taxi drivers and tuk tuk drivers), plus Logistics.
“We will take it on a case-by-case basis, firstly assessing an individual’s cash flow situation. Although no customers have asked for help yet,” she said.
“However, we cannot predict the next few months, but we are putting measures in place if things start to change,” she added.
Elsewhere, Canadia Bank’s Chief Executive Officer Raymond Sia told Khmer Times that it is business as usual because the bank always follows the directives set out by the regulatory bank.
“We will take a consultative and accommodative approach when dealing with our customers who have been affected by COVID-19. All requests will be given their due merit, with our credit committee discussing next steps,” he said.
Cambodian Public Bank say they are taking a pro-active approach by offering loan repayment postponement, allowing interest-only on loans to be paid and extending the loan tenure or maturity date to their customers who are experiencing financial distress.
Datuk Phan Ying Tong, regional head of Indo-China operations at the bank,
said, “With the escalating COVID-19 pandemic on a global scale, the bank is very concerned about its impact on the nation and hopes this assistance will provide relief to its customers.”
“As the outbreak escalates, Cambodian Public Bank will continue to be pro-active in providing loan moratoriums to help all of its customers with their cash-flow situation and alleviate their financial difficulties in this very challenging time.”
Microfinance institution LOLC (Cambodia) Plc is already dealing with customers requesting to pay only the interest rate on their loans for the upcoming three months, with still more asking for a delay on both interest rate
and principle repayment, according to their Chief Executive Officer, Sok Voeun.
On March 27, 2020, the National Bank of Cambodia (NBC) issued a directive to all banks and financial institutions to restructure loan repayments in order to maintain financial stability, support economic activity and ease the burden of debtors facing major revenue declines caused by the COVID-19 outbreak.
Their guidelines outline that banks and financial institutions must first establish a board-approved policy and procedures before verifying that clients are indeed struggling financially before restructuring their loans. The NBC’s suggested easing measures include reducing the amount of the loan principal or the amount of the bullet loan repayment; lower interest rates to be lower than the rate in the original contract; extending the payment deadline for the principal, interest, or interest capitalisation; extending the deadline for repaying a bullet loan; adding or changing creditors or guarantors, if applicable; converting loan repayment by installment to interest-only repayment and bullet repayment for the entire amount of the loan principal; waiving or reducing collateral; reducing conditions in the contract or providing a grace period for non-repayment of up to six months from the effective date of the new contract.
Banks and financial institutions are also required to closely monitor restructured loans and provide monthly reports to the NBC. The reports must include the following information: type of loan, loan purpose, location, gross loan amount, bullet loan payments, favourable conditions, loan classification and date of restructured loan, loan status (performing, non-performing or multiple restructuring).