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Cambodia – CMA: Loan restructures increasing
Restructured loans at member institutions of the Cambodia Microfinance Association (CMA) totalled about $1.5 billion as of April, according to the organisation.
CMA’s Executive Director Phal Vandy told local media that loans doubled from February to March this year and have increased at an even faster rate since then. Loans extended in April were seven times higher than February and Vandy said he expects loans to increase even more in May.
He said during the first five months of 2021, more than 35,800 loans totalling more than $176 million were refinanced.
Vandy urged all CMA members to continue to assist debtors facing difficulties by restructuring loans.
The National Bank of Cambodia (NBC) said all financial institutions should continue restructuring loans until mid-2021.
NBC first issued the directive to restructure loans in March 2020 in an effort to maintain financial stability in the country as the pandemic started to affect the economy.
Four sectors were prioritised in the directive: tourism, the garment industry and transportation.
According to a summary of the directive by local law firm Tilleke and Gibbons, the NBC recommended that financial institutions perform due diligence by verifying that a debtor is struggling financially and that these struggles are short term. Loans that were 90 days late or less were meant to be automatically restructured.
The directive said banks and financial institutions could reduce principal amounts, lower interest rates, extend pay schedules and offer grace periods as part of their restructure.
Banks and financial institutions participating in the government-recommended restructuring programme were directed to provide monthly reports on the loans to the NBC.
Last month, the Association of Banks in Cambodia (ABC) and CMA issued a joint directive ordering member financial institutions to further relax repayment measures to allow debtors to stay home during lockdowns and protect themselves from COVID-19.
The directive ordered member institutions to suspend payments, reduce interest to zero and waive accrued interest for three months.
Earlier this month, the NBC called out Active People’s Microfinance Institution for continuing to demand payment from customers affected by the pandemic despite guidelines that expressly forbade the practice.
Local media reported that the microfinance institution was refusing claims from clients living in locked down areas by challenging the veracity of their residence location as well as going after guarantors and family members to collect overdue payments and threatening debtors in default with assertions that they would no longer be able receive loans from any institution if they refused to make payments.
Source: https://www.khmertimeskh.com/50859588/cma-loan-restructures-increasing/