Microfinance institutions (MFIs) have taken some actions to restructure their loans for affected customers because of the COVID-19 pandemic, according to the Cambodia Microfinance Association (CMA).
The CMA said that the association, including its members, are dealing compassionately with affected customers. They added that all members are maintaining ethical practices and helping all the Cambodian people to access their wide range of financial services and ensuring the finance is inclusive and sustainable.
“For this situation, we altogether should join hands and solve the issues for both customers and financial institutions. All CMA’s members have made strong efforts to support customers affected by COVID-19,” the CMA said.
The CMA added that to support the affected customers, each member has been implementing and solving the issues based on their internal principles, based on the type of customers, impact and actual situation for each customers by aligning with the guidelines of the National Bank of Cambodia.
“To have their loan restructured, all MFIs’ customers should contact their lenders to discuss the situation and find a solution based on a win-win strategy to continue developing the financial sector and national economy,” the CMA said. “They [customers] should provide comprehensive information in order to resolve any issues,” added the CMA.
“For those customers who are not affected or slightly affected and are able to pay their debt, the CMA encourages them to continue their monthly payments so that each MFI institution will use this opportunity to help the most affected customers,” it said.
The CMA will work with its members to monitor closely the microfinance sector and will take immediate action to solve all the issues.
Say Sony, executive vice-president and chief marketing officer of PRASAC, told the Khmer Times that PRASAC has received some requests to postpone payments or delay the interest rate from customers.
“We have had a few clients that have requested to reschedule loans because they are not receiving income during this period. We will discuss individual cases with them and if they face a difficult situation caused by COVID-19, with a willingness to repay we will discuss rescheduling their loan and find the best possible solution for both parties,” Say said.
Sok Voeun, chief executive officer of LOLC (Cambodia) Plc, said that up to now, mostly, customers are repaying their loans on schedule, However, there are some customers requesting to pay only the interest rate for three months and some asked for a delay for both the interest rate and the principal.
“The company is studying request loan restructuring. We will make the decision if they are affected by COVID-19 and we will study applications on a case-by-case basis,” Sok said.
On March 27, the National Bank of Cambodia (NBC) issued a directive to all banks and financial institutions to restructure loans in order to maintain financial stability, support economic activity and ease the burden of debtors facing major revenue declines who may find it difficult to repay loans during the ongoing COVID-19 outbreak.
This directive requires banks and financial institutions to establish a policy and procedure on loan restructurings amid the COVID-19 outbreak and have it approved by the board of directors.
The NBC said that the banks and financial institutions must also pay close attention to clients, with particular attention given to those engaged in the following sectors: 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 transportation (especially taxi and tuktuk drivers) and logistics.
The directive recommends that banks and financial institutions verify that clients are struggling financially before restructuring their loans; loans will be restructured if a client’s interest or principal payments are late but not for more than 90 days (i.e. is still a performing loan) and that the client expects that this period of financial difficulty is only temporary.