MICROCAPITAL BRIEF: National Bank of Cambodia: Foreign Banks Struggling to Meet 10% Local-currency Lending Requirement Should Partner with Microfinance Institutions

The National Bank of Cambodia (NBC) continues to resist suggestions that it soften the decree it made in December 2016 that all financial institutions boost their local-currency lending to 10 percent of their portfolios by December 2019. NBC Director General Chea Serey reportedly said foreign banks struggling to meet the new threshold should partner with microfinance institutions (MFIs) because they have greater market share in rural areas, where borrowers are more interested in local-currency loans.

The President of the 86-member Cambodia Microfinance Association, Hout Ieng Tong, was quoted as having said, “I have checked with the top 10 MFIs and they haven’t notif[ied] me of any issues. Most of them already have 6 to 7 percent of their loan portfolios in the local currency and will reach the 10-percent target as planned.”

Sources and Additional Resources

Khmer Times article

National Bank of Cambodia

Cambodia Microfinance Association

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