The National Bank of Cambodia (NBC) and the Ministry of Economy and Finance (MEF) released a joint statement on Friday, August 24, asking banks and microfinance institutions to find ways to help farmers in the flooded areas of the Kingdom.
The government has observed that this year’s flooding hit some provinces very hard, rattling infrastructure in general and agricultural producers in particular.
“To relieve the financial pressure on the farmers, the Ministry of Economic and Finance and the National Bank of Cambodia encourage banks and MFIs [microfinance institutions] to find soft mechanisms to help farmers who suffer from the actual flooding … in order to stabilize and solidify the financial sector,” the statement read.
These mechanisms may include a reduction of interest rates, temporary interest waiver, or introduction/ extension of grace periods for loan payments.
The statement highlighted that banks and MFIs should refrain from foreclosing people’s property, and provide support for those most harshly affected by the deluges.
“We hope that banking institutions and MFIs, local authorities and relevant stakeholders will join us in lessening the burdens and financial pressure on the farmers suffering from the actual flood.”
Chea Phallarin, CEO of Amret Microfinance Institution and member of the board at the Cambodia Microfinance Association (CMA), told Khmer Times that “we (Amret and other MFIs) share the same view [as the NBC and MEF] and are preparing ourselves to resolve the issues of the farmers … We will check the impact on each individual household, … talk to them and help them find ways of loan payment …”
Mr Phallarin’s MFIs provided loans to about one third of the total loan portfolio in the agriculture sector. Some of those loan recipients live along the Mekong River, and many of them experience flooding every year. They have hitherto found ways and means to repay their loan from the MFIs, and have as yet not requested help.