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Requests for loan restructuring falling

Sorn Sarath / Khmer Times Share:
PRASAC microfinance institution in Phnom Penh. KT/Pann Rachana

The Kingdom’s microfinance institutions (MFIs) have approved more than $1.223 billion for loan restructuring with a total client figure of 248,262, according to a report from the Cambodia Microfinance Association (CMA), but requests are falling.

The figure shows that by Aug 2, there were 264,091 clients who had requested loan restructures with a total loan value of more than $1.325 billion.

Kaing Tongngy, a spokesperson for the CMA, said that after the National Bank of Cambodia (NBC) issued a directive in March to all banks and financial institutions to restructure loan repayments, the number of people requesting help started to decrease since June because their businesses had reopened. He expects the requests will keep decreasing until the end of 2020.

Tongngy said that even if the Kingdom sees a rise in new cases of COVID-19, the sector will remain stable.

“Despite new cases of COVID-19 currently rising, the MFIs sector is not seeing any changes yet. We assume it’s because all the cases were brought in from other countries,” he said. “Protecting MFI staff and clients from COVID-19 remains our priority.”

He said MFIs will continue to help affected Cambodians with loan restructuring until the end of 2020 and will also keep providing loans and other financial services to all Cambodian families who need them.

However, Tongngy said MFIs’ new loan disbursements over the second quarter saw significant decreases.

“We saw new loans decline by nearly 50 percent for the second quarter compared with last year,”
he said.

According to Tongngy, by the second quarter of 2020, the total loans outstanding in the sector (MFIs, leasing companies and rural credit operators) were $7,262 million shared among 2,186,143 clients while total deposits were 3,618 million with 2,870,223 depositors.

PRASAC Executive Vice-President and Chief Marketing Officer Say Sony said the trend of requesting help from the institutions is going down because many business have started up as well as others reopening.

He said the current situation of COVID-19 is on high alert but it is still under control because all the cases are imported from other countries.

“I personally see positive growth in MFI operations because PRASAC is providing loans as normal to its qualifying clients, especially SMEs (small and medium enterprises) while, at the same time, we have to closely monitor our performance and risk,” he added.

Sony said PRASAC’s performance is still strong with gross loans growth of 8.8 percent  from $2.501 billion to $2.721 billion and deposits growth about 11 percent  from $1.788 billion to 1.984 billion at the end of July, year-on-year.

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