Logo of Phnom Penh Post newspaper Phnom Penh Post - Refinancing applications drop sharply

Refinancing applications drop sharply

Content image - Phnom Penh Post
The National Bank of Cambodia (NBC) late in March issued a directive to all banks and financial institutions – including microfinance institutions (MFIs) – to restructure credit for loans in four priority sectors. Hong Menea

Refinancing applications drop sharply

The number of loan restructuring applications has seen a steep drop over the last three months in an encouraging sign of Covid-19’s loosening grip on the Kingdom, the Cambodia Microfinance Association (CMA) said.

The National Bank of Cambodia (NBC) late in March issued a directive to all banks and financial institutions – including microfinance institutions (MFIs) – to restructure credit for loans in four priority sectors.

The move was a bid to maintain financial stability, support economic activity and ease the burden of debtors facing declining revenues during Covid-19.

The four priority sectors cited by the NBC were garments, construction, logistics and transport (with emphasis on taxi and tuk-tuk drivers).

Between March 1 and August 9, 266,818 clients affected by Covid-19 had applied for credit restructuring from MFIs, CMA head of communications Kaing Tongngy said. Of the number, 250,905 or 90 per cent were approved for $1.23 billion.

But he noted that the number of applications steadily declined to a weekly average of 20,000 in April-May and 10,000 in May-June.

Tongngy predicted a further contraction to 2,000-3,000 by the end of this week.

“We can conclude that the impact of Covid-19 has significantly ebbed, and some customers have even asked to pay principal and interest as they had done in the past,” he said.

Vithey Microfinance Plc CEO Bun Mony told The Post on Thursday that his MFI has also seen a downtick in the number of loan restructuring applications in recent months.

Since last month, he said, his institution had disbursed an average of between $100,000 and $150,000 per month, having been unable to do so just months before at the apex of the Covid-19 crisis.

“We now have a lot of new customers coming in and borrowing money from our institution to expand operations and start new businesses, so we can disburse capital steadily from now on,” Tongngy said.

The PAR30+ ratio of the microfinance sector increased from one to two per cent during Covid-19, which he said was not at alarming levels.

By the second quarter of 2020, 2,186,143 clients had outstanding loans from MFIs, leasing companies and rural credit operators to the tune of $7.262 billion, while a total of 2,870,223 depositors had deposited $3.618 billion, according to data from the CMA.

MOST VIEWED

  • WHO: Covid in Cambodia goes into new phase

    The World Health Organisation (WHO) in Cambodia said that Cambodia has reached a new phase of the pandemic with “decreasing case numbers, high vaccination coverage and a more transmissible circulating variant threatening a hidden surge”. In a press release on September 6, the WHO said that

  • 'Pursue your goals, reach out to me': Young diplomat tapped as envoy to South Korea

    Chring Botum Rangsay was a secretary of state at the Ministry of Foreign Affairs and International Cooperation before being designated as the new Cambodian ambassador to South Korea. According to her official CV published on the foreign ministry’s website, she started her first government

  • International air visitor arrivals dip 93%

    The number of foreign tourists entering Cambodia through the Kingdom’s three international airports witnessed a sharp 92.5 per cent year-on-year decline in the first seven months of this year, according to the Ministry of Tourism. The airports handled 51,729 international tourists in the January-July period versus

  • School reopening ‘offers model for other sectors’

    World Health Organisation (WHO) representative to Cambodia Li Ailan said school reopening process should be used as a role model for reopening other sectors currently mothballed by the Covid-19 pandemic. Li strongly supports the government’s decision to reopen schools, saying it is a decision

  • Covid jab drive for 6-11 age group to begin Sept 17

    Prime Minister Hun Sen has permitted Covid-19 vaccinations for over 1.8 million children aged 6-11 across the country from September 17 in order for them to return to school after a long hiatus. Hun Sen also hinted that vaccinations for the 3-6 age group will follow in

  • Is Cambodia’s microfinance sector running its course?

    Economic growth and the strength of the banking system might have prompted a slow decline of the microfinance segment that has been raising a population ‘The MFI business model is over,” opined David Van, a Cambodian investment expert, recently. He felt that in a couple