[PHNOM PENH POST]
The National Bank of Cambodia was pushing microfinance institutions to
look to domestic banks for funding in an industry heavily reliant on
foreign loans, experts said yesterday.
Although the NBC is
seeking to foster healthier relationships between MFIs and the Kingdom’s
commercial banks, a dearth of collateral among MFIs is hindering
domestic borrowing.
“We encourage direct links between MFIs and
commercial banks because we want to stop MFI reliance on external
sources,” Ngoun Sokha, director- general of the National Bank of
Cambodia, said yesterday. “We want to avoid external exposure.”
International
borrowing increased the chances that financial turmoil in foreign
markets, such as the sovereign-debt crises in Europe, would wreak
domestic havoc, she added.
A high level of liquidity in
Cambodia’s commercial banking sector, along with lower interest rates
compared to foreign loans, were also incentives for domestic borrowing,
Nguon Sokha said.
Cambodia’s 23 MFIs loaned more than US$420
million in 2010, up from about $304 million in 2009, according to NBC
data. The institutions held about $40.5 million in deposits at the end
of 2010, according to the data.
Along with greater stability,
processing domestic loans had become increasingly easy, Chea Phalarin,
chairman of the Cambodian Microfinance Association, said yesterday.
Complications and excessive requirements that once forced MFIs to turn
to Europe for funding had been relieved, he said.
“More than anything, we can do the paperwork [for domestic loans] easily,” Chea Phalarin said.
Funding for the Amret Microfin-ance Institution, which Chea Phal-arin manages, was still wholly sourced from Europe, he added.
Prasac
Microfinance is 70 per cent financed by loans from Europe, but general
manager Sim Senacheert said he had taken a loan from a dom-estic
commercial bank, Maruhan Japan, to diversify the institution’s sources
of capital.
“This will help to curb the flow of our money abroad
and keep our value added by generating more domestic jobs via increasing
our branches,” Sim Senacheert said.
However, a lack of up-front
guarantees from MFIs prevented the institutions applying for domestic
loans, Canadia Bank’s Dieter Billmeier said yesterday.
“MFIs in
general are not able to offer collateral,” he said, adding that Canadia
Bank had for some years had a small wholesale loan agreement with an
existing MFI on its books.
About $5 million, or 1.18 per cent, of
Cambodian MFI loans at the end of 2010 were non-performing, according
to NBC data, down from 2.8 per cent the year before.
Nguon Sokha agreed that inadequate collateral stood in the way of increased business between MFIs and domestic banks.
“This will not lead to smooth bank operations, because [banks] are mostly thinking about collateral,” she said.
The
NBC was, however, preparing a study on how it can vouch for MFI
collateral in the future, Nguon Sokha said. This move would lead to more
free-flowing borrowing practices, although she said a time frame on
when the new policy would be in place had yet to be determined.
No comments:
Post a Comment