National Bank of Cambodia (NBC) governor Chea Serey (centre) at the official launch of the standard loan contract on August 29. NBC
The difference in financial institution loan agreement terms would be eliminated following the introduction of the Standard Loan Contract and Standard Text of Contractual Terms for Banking and Financial Institutions.
The new standard loan agreement, which was launched by the Association of Banks in Cambodia (ABC) and the Cambodia Microfinance Association (CMA) at an event attended by National Bank of Cambodia (NBC) governor Chea Serey on August 29, would apply to new loans beginning November 1, 2023.
Thus, existing loan agreements and conditions would remain unchanged, ABC vice president Rath Sophoan said, adding that the agreement was designed in accordance with the requirements of the Prakas on Unfair Contractual Clauses and the Law on Consumer Protection.
The joint standard loan contract would also contribute to strengthening the mechanism for resolving customer complaints.
In this sense, the complaint numbers of both institutions and associations are also included in the joint credit agreement.
“ABC would set up a customer complaint management framework within the association, and in the future, a Financial Client Centre would be established,” Sophoan said.
He added that the joint standard loan contract would continue to contribute to the promotion of transparent competition, promote customer protection as well as contribute to the development of the banking and financial sector in Cambodia in a stable, sustainable and inclusive manner.
Sok Voeun, chairman of the Microfinance Association of Cambodia, said in the past, credit agreements were made separately by banking and financial institutions, with different terms and conditions for each institution, which created problems.
He said this standard loan agreement would be implemented by financial institutions, including commercial banks, specialised banks, deposit-taking microfinance institutions, non-deposit-taking microfinance institutions, rural credit institutions and financial leasing companies.
“I firmly believe that [its implementation] would increase transparency, efficiency and improve customer protection in the banking and financial sector … it would only apply to new lending or new customers effective November 1, 2023,” he said.
Meanwhile, NBC’s Serey said the guidelines on the implementation of Standard Loan Contract and Standard Text of Contractual Terms for Banking and Financial Institutions is another achievement by the financial sector in terms of protecting customers and the financial environment in Cambodia.
The financial sector is playing an important role in the process of developing and supporting the national economy, especially contributing to poverty reduction.
“Its introduction is a contribution to the implementation of the Pentagonal Strategy, Phase One of the Seventh Legislature of the Government,” she said.
According to Serey, the work of financial inclusiveness is a priority that has been focused on and stated in the Strategy on the Financial Inclusive 2019-2025.
The central bank’s 2022 annual report states that Cambodia has 59 commercial banks, nine specialised banks, five deposit-taking microfinance institutions and 82 non-deposit-taking microfinance institutions, 224 rural credit institutions and 16 financial leasing companies.
In 2022, customer loans rose 18.9 per cent to $56 billion while consumer deposits gained 9.2 per cent at 174.4 trillion riels.
