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NBC: Financial institutions in H1 restructure $5.5 billion in loans

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Financial institutions have restructured 22.2 trillion riel ($5.5 billion) in loans for 367,239 borrowers in the period from January-June. Heng Chivoan

NBC: Financial institutions in H1 restructure $5.5 billion in loans

The Kingdom’s banking and financial institutions have restructured 22.2 trillion riel ($5.5 billion) in loans for 367,239 borrowers in the first half of this year, to ease the burden on the public as the ongoing coronavirus outbreak dampens economic activity, according to the National Bank of Cambodia (NBC).

Cambodia Microfinance Association (CMA) Communications Department director Kaing Tongngy told The Post that the CMA’s 114 financial institution members – including four banks – had restructured more than $1.664 billion in loans for 348,094 clients as of July 11.

At the beginning of the year, the number of loan restructuring applications were fewer than 1,000 per week, but that figure jumped sharply after the third coronavirus outbreak – dubbed the “February 20 community event” marking the date it was first detected – peaking in April-May at around 20,000, before easing back over subsequent months to about 2,000 in the last week, he said.

“Credit restructuring has eased the cash burden and repayment terms of the affected customers – severely and moderately – helping them to keep running their businesses as usual.

“Monthly payments are less than previous amounts, or have been completely suspended for a while, and do not affect Credit Bureau of Cambodia credit histories.

“In most cases, customers choose to pay only interest for three to six months, extend credit periods, or in extreme cases, suspend both interest and principal for three to six months,” Tongngy said.

The financial sector as a whole has introduced additional intervention measures over the year to alleviate the burden of the people most directly affected by the pandemic, such as those in quarantine, Covid-19 patients and families of deceased victims of the disease.

Prasac Microfinance Institution Plc senior vice-president Say Sony emphasised that Prasac has been following the NBC guidelines to take some of the burden off clients and accommodate those who are experiencing difficulties.

“Therefore, we will review customer requests based on feasibility and practical principles. We expect a reduction in the second half if the rate of Covid-19 infections decreases and the vaccination campaign completes, and we will be attentive to the implementation of the ‘three protections and three don’ts’ rules,” he said.

Financial institutions in Cambodia restructured some $4.2 billion in loans for 285,074 borrowers as of December 31 since the NBC on March 27, 2020 issued a circular on loan restructuring during Covid-19, to ease the burden on creditors in four priority sectors flagged as the most severely-hit by the pandemic – tourism, garments, construction, and transport and logistics, according to the central bank’s 2020 annual report.

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