IMF advises Cambodia's central bank to halt licenses to new banks

[XINHUA]

PHNOM PENH, Feb. 28 -- The International Monetary Fund (IMF) advised the National Bank of Cambodia (NBC) not to grant licenses to new banks to strengthen the supervision and health of the country's existing banks, said the Fund's in a press release issued on Tuesday.

"For Cambodia, the main challenge ahead is building a deeper financial system while safeguarding financial stability," the Fund said after the IMF Executive Board Concluded 2011 Article IV Consultation with Cambodia earlier this month.

"Amid a rapidly growing banking system, a moratorium on bank licenses would provide a critical window to build adequate supervisory capacity and improve the balance between the degree of competition and health of banks."

The country, with the population of 14.5 million, currently has 32 commercial banks, seven specialized banks, 32 microfinance institutions and 29 rural credit operators, according to the NBC's report, adding that the banking industry has the total current asset of 7.94 billion U.S. dollars by the end of last year.

The NBC's Director General Nguon Sokha said Tuesday that more banks would bring new capital, technologies and options for customers.

"New foreign banks with good qualifications and international reputation are still welcomed because they will inject new capital into Cambodian economy, bring new hi-tech banking technology and provide more options for customers," he told Xinhua over telephone.

Under Cambodia's laws, it requires a registered capital of 37.5 million dollars to open a commercial bank.