The banking sector saw loan restructuring of $2.16 billion covering 44,500 accounts as of June this year, according to a report from the Association Banks of Cambodia (ABC).
ABC General Manager Heng Koy told Khmer Times banks would continue to allow restructuring.
“Restructuring loans won’t affect the banking industry because it’s allowed by the March 27 NBC (National Bank of Cambodia) circular on loan restructuring. Instead. It helps the bank
to be able to support their customers to get relief from a major economical event,” he added.
The NBC said banks and financial institutions should clearly identify clients who are expected to experience financial difficulties before restructuring their loans, which should be given to clients with a new repayment of interest and/or principal sums due in more than 90 days and offer new deals only to clients experiencing financial difficulties and repayments for an interim period. Any new deals should expire on Dec 31.
Koy, however, added that the banks should take into consideration the type of the business, and compare current revenues to previous revenues and cash-flows before COVID-19 struck. They should then submit qualified applicants’ details to their head office because they would
be centrally decided by a unit specialised in loan restructuring.
According to the ABC, loan structures are mainly for agriculture, construction, mortgages, personal finance and small businesses.
ACLEDA Bank’s Executive Vice-President and Group Chief Operations Officer Mar Amara, told Khmer Times that it had put much effort into raising the awareness of the public about financial literacy independently and also in collaboration with the NBC.
She said that the bank has also met customers directly to educate them on how to use the loan and on their obligations as well as solving their issues. “We follow the regulation and the law,” Amara added. “We are under the NBC, so the NBC will not allow the microfinance and banking sector to operate their business against the law. How we position ourselves is based on the law and regulations and checked by the NBC,” she continued.
She said that as of July 2020, the bank had restructured the loans of 1,513 clients, with most clients (26 percent) in the tourism sector.
“When our customers encounter an issue, we try to learn about it and resolve it especially if it concerns COVID-19. We are not forcing them to repay the loan when they meet issues because
we know that it is a tough situation,” Amara said.
Shin Chang Moo, president and chief executive officer of PPCBank, told Khmer Times that PPCBank has initiated loan restructuring since May and so far the total programme had reached out to around 200 customers and involved $55 million, which is the equivalent to a little over seven percent of the banks total loan portfolio.
He said that the introduction of a loan restructuring programme will not only benefit borrowers in peril, but give lenders time to assess the new risks and potentials they have never been confronted with before.
“In order to maximise the benefits, we had set up an exclusive desk for consultation and application on a restructuring programme and opened a call centre for interested customers.” Major sectors included tourism, education, export manufacturing, and trading with restructuring volumes in that order, Shin said.
“Overall credit business in year 2020 will definitely slow down, but I am sure growth is not the top priority among most of the credit institutions in Cambodia at least for this year,” Shin added.
He also said that it is too early to predict what happens after the restructuring period ends, but his staff were carefully monitoring customers on the programme and offering a variety of support and assistance available from the bank and various sources in the public sector including the NBC and the Ministry of Economy and Finance.
According to the Cambodia Microfinance Association, from March to Aug 9, around 266,820 customers had asked for loan restructuring because of difficulties caused by COVID-19. More than 250, 905 customers were approved for loan restructures involving a total of $1.232 billion.
The NBC said that loan restructuring amends the terms of the original loan contract, thereby, allowing special arrangements to be made to clients who are in actual and temporary financial difficulty.The offers include capital or interest reductions, contract amendments or restructures and various grace periods.