Logo of Phnom Penh Post newspaper Phnom Penh Post - NBC urges increased use of riel in lending

NBC urges increased use of riel in lending

Content image - Phnom Penh Post
The National Bank of Cambodia (NBC) urged financial institutions across the Kingdom to increase the share of local currency in their loan portfolios to at least 10 per cent by the end of this year. Post Pix

NBC urges increased use of riel in lending

The National Bank of Cambodia (NBC) urged financial institutions across the Kingdom to increase the share of local currency in their loan portfolios to at least 10 per cent by the end of this year.

During its 48th Monetary Policy Committee meeting last week, the NBC reminded commercial lenders to comply with the new requirement.

In December 2016, the NBC issued a prakas instructing all banks and MFIs to hold a minimum 10 per cent of their loan portfolio in riel.

The NBC has given commercial lenders until the end of this year to comply.

Kea Borann, AMK (Angkor Mikroheranhvatho Kampuchea) Microfinance Institution Plc CEO, said local currency accounts for 70 per cent of its total loan portfolios.

Borann, who is also a member of the Cambodia Microfinance Association (CMA) Board of Directors, said: “[Given that] most of our clients are rural farmers and our loans are mostly micro, many of our borrowers need riel for their transactions,” he said.

He added that “around 30 per cent of all MFIs in the Kingdom” would find it difficult to adhere to the NBC’s new requirement, saying those institutions “do not have a lot of operations in the countryside where the riel dominates”.

However, he said: “It’s not a big obstacle because the NBC has provided so much facilitation to ensure the success of the policy.

“I think, eventually, more and more microfinance institutions will succeed in meeting the standard set by the NBC.”

Bun Mony, chairman of Vithey Microfinance Institution, said currently many banks are struggling to lend riel to people even with a lower interest rate.

“I strongly support lending in riel because it will promote the use of the currency,” he said, adding that local currency acoounts for more than 10 per cent of the banks loan portfolios.

President and Group Managing Director of Acleda Bank Plc., In Channy, said riel accounts for 12.5 per cent of its total loan portfolios.

“For Acleda, increasing our share of lending in the local currency is not difficult because the bank serves customers from urban and rural areas,” he said.

Bun Yin, CEO of CIMB Bank Plc, was optimistic that it would meet the NBC’s requirement by the end of this year.

“The share of local currency in CIMB’s loan portfolios has reached seven per cent so far,” he said.

In November last year, Phillip Bank’s general manager Han Peng Kwang said the majority of borrowers in Phnom Penh still prefer to apply for loans in US dollars rather than riel, though some have become more receptive to borrow a portion of their loan in riel.

MOST VIEWED

  • $3 billion in reserve ahead of possible EBA withdrawal

    The government has reserved around $3 billion to cope with a possible suspension of the Kingdom’s access to the EU’s preferential “Everything But Arms” (EBA) agreement. Hav Ratanak, the director-general of the Ministry of Economy and Finance’s General Department of Budget said this

  • Gov’t to raise 20% more tax revenue

    As part of efforts to achieve a sound macroeconomy, the government plans to increase the revenue raised from taxation and customs and excise by more than 20 per cent next year. The 2020 national budget law approved on Tuesday targets a 28.1 per cent increase in revenue collection

  • ‘Pesticide-laden cucumbers’ kill two, poison 150 in Banteay Meanchey

    At least two youths have died and 243 others are being treated for vomiting, diarrhoea, breathing difficulties, dizziness and muscle weakness after they ate cucumbers suspected to consist of pesticides. The incident happened on Saturday, said Banteay Meanchey provincial police chief Ath Khem. He told The

  • Three dead, 13 injured in collapse at Siem Reap pagoda

    At least three people were killed and more than 10 others injured on Monday after a dining hall under construction collapsed at Prasat Kokchak pagoda in Kokchak commune, Siem Reap province. Provincial police chief Tith Narong said Military Police, soldiers and local volunteers had successfully recovered 16

  • Authorities seize counterfeit wines

    The authorities have cracked down on a business allegedly producing counterfeit red wine in Banteay Meanchey province, arresting three people, while in a separate case, the Phnom Penh Municipal Court was questioning a suspect who was allegedly involved in the illegal production of cosmetic products.

  • Further heritage aiming to join Lakhon Khol

    As the Kingdom marks the first anniversary of the inscription of traditional Cambodian dance drama Lakhon Khol on Unesco’s cultural heritage list, the government is preparing to have 10 other forms of tangible and intangible heritage registered with the UN body. To commemorate the inscription