Agriculture Rural Development Bank (ARDB) together with Wing (Cambodia) Ltd Specialized Bank and Cambodia Investors Corp (CIC) inked a memorandum of understanding (MoU) to facilitate loan repayments, encourage the use of digital banking and to provide information to borrowers to guarantee the credit deal.
The MoU between ARDB and Wing is to allow the ARDB’s customers to pay back the loan – the interest rate and principal via Wing agents across the country, to provide safe and quick cost-savings on loan repayments and to help reduce the cost of travelling and accommodation for ARDB’s customers who visit the bank’s headquarters to make repayments, as well as to encourage customers to use digital banking to align with the government’s policy on a digital economy.
The MoU between ARDB and CIC provides cooperation by offering information on borrowers to the bank and acting as a credit guarantee on behalf of the borrowers, especially owners of small and medium businesses (SMEs). CIC will also help the SME owners who lack collateral to get additional working capital to expand their business and boost relationships between them and producers, processors and goods collectors with the bank as a basis to make a loan assessment.
Wing (Cambodia) Ltd Specialized Bank CEO Manu Rajan, said the MoU between ARDB and Wing is the start of a new partnership which he believes will go a long way towards driving financial inclusion and providing easy access to finance for every SMEs and every agri-business in Cambodia.
“Wing and ARDB share the same vision of providing convenient access to financial services to the communities that we serve thereby helping to improve the quality of lives of every single Cambodian,” Manu said.
“SMEs and agri-business play an important role in enabling Cambodia to attain its aim of upper-middle-income status by 2030 and high-income status by 2050. They create jobs, generate cash for low-income people, foster economic growth and social stability and contribute toward the development of a dynamic private sector,” he added.
He said that with this collaboration, the customers of ARDB now can make the loan repayment from any of 7,500 Wing Cash Agents across Cambodia in every single district and rural community. They can also transfer money instantly by using the Wing app.
Chief Executive Officer of Agriculture Rural Development Bank Kao Thach also said the MoU means borrowers can pay loan installments where they live and where there are Wing Cash Agents.
“In the future, we will expand the scope of cooperation,” Thach said.
ARDB will also sign the MoU with Cambodia Investor Cooperation to cooperate on the credit guarantee of its loans. They will be the risk receivers of ARDB’s customers.
“We know that borrowers are now running out of collateral because it is with banks or MFIs [microfinance institutions] or other places, so they lack working capital. To borrow money from ARDB, they will need a credit guarantee entity, so we hope that it will help the lender to make a decision.
As of May 26, 232 applications have been made for the ARDB’s $50 million special fund. The total value is about $25 million. ARDB has approved $2.4 million while another 65 applications are being checked by ARDB officers before approved or rejected. He said that mostly the loans go to aquatic, livestock, poultry and vegetable farms.
The government also announced that it will expand the scope of financing and adjust the terms of credit of the government’s $50 million special fund through the ARDB. The bank will reduce the interest rate from 6 to 5 percent for working capital and 6.5 percent to 5.5 percent for investment capital, as well as increase the payment period for up to seven years. The new terms for the loans are only to new borrowers while existing borrowers will have to stick to the old agreements.