The government last week asked loan providers to ease the burden of loan payments on farmers affected by recent floods to help them get back on their feet.
In a joint statement issued Friday, the National Bank of Cambodia and the Ministry of Economy and Finance urged banks and microfinance institutions to help flood-stricken farmers by postponing due dates, extending grace periods or suspending interest charges on loan payments, among others.
The announcement comes just a day after Prime Minister Hun Sen ordered the Central Bank to temporarily cease interest charges on those affected by the floods and delay the collection of debt owed.
“Please understand that their payments could be delayed because they are in a difficult position,” the premier said. “Their crops were damaged, please don’t confiscate their property.”
Friday’s joint statement said the floods have been particularly devastating in agricultural areas.
“To relieve farmers’ financial pressure, the Ministry of Economic and Finance and the National Bank of Cambodia urge banks and MFIs to find soft mechanisms to help farmers suffering from the floods.
“Banks and MFIs must play a role to help the farmers in order to maintain the stability of the financial sector,” the statement read.
“They can extend the grace period, reduce interest rates, and suspend interest charges,” it said.
The statement said loan providers must refrain from seizing farmers’ property if they are unable to pay, and should instead give them support and guidance to help them meet future payments.
“We hope banks, MFIs and local authorities will join us to relieve the burden on the farmers who are suffering from the floods,” the statement said.
Chea Phallarin, CEO of Amret Microfinance Institution and board member of the Cambodia Microfinance Association, told Khmer Times that they share the Central Bank and the ministry’s view on the importance of helping struggling farmers.
“We also believe it is important to help these farmers and we are preparing ourselves to tackle this issue,” Mr Phallarin said.
“On a case-by-case basis, we will check the situation of farmers, talk to them and help them re-structure their payments.
“We will help them get back on their feet,” Mr Phallarin said. 30 percent of Amret’s loan portfolio is in the agriculture sector, he added.