(Source: NBC, Micro Finance of Cambodia, 2007)
The Cambodian banking system
The Cambodian financial system is at the early stages of development. It started in the early 1990s after the government launched the economic reform program from a planned economy to a market economy. Actually the most advanced financial sectors are banking and microfinance which have been regulated and supervised properly after the adoption of the Law on Banking and Financial Institutions in November 1999. Other financial sectors such as insurance have been developed only at the end of the 90s and the capital market is yet to be developed.
The Cambodian banking system consists of the central bank, the National Bank of Cambodia, banks and MFIs. In 2008, there were 31 banks of which 24 are commercial banks, 6 are specialized banks and 2 are representative offices of foreign banks. Among the 24
commercial banks, 21 are locally incorporated and 3 are foreign banks’ branches. Four out of 6 specialized banks are private owned and one is state owned. The majority of banks are the result of the banking reform process that has been carried out by the NBC starting from 2000 after the promulgation of the Law on Banking and Financial Institutions in November 1999. The purpose of the reform is to issue a new series of prudential regulations to set up criteria for licensing to permanent shareholders identification and strengthening the capital base. As the result, 16 banks stepped out of the system.
Micro Finance Institutions
In 2000, the NBC started to issue and revise regulations in order to transform NGOs into registered and licensed MFIs according to their scope of operations. After receiving license and registration certificates, those institutions have been regulated and supervised by the NBC. For the first time in 2000, the NBC issued regulations on the classification of MFIs, classifying all MFIs into three categories according to the level of their operations with different criteria for being licensed and registered. Since 2002, some NGOs have been licensed and some others have been registered. By the end of 2008, there were 18 licensed MFIs and 26 registered as rural credit operators operating freely in the whole country. Among those institutions, the majority of them were transformed from NGOs, while others were local private companies. The obstacle preventing NGOs from being transformed into MFIs is ownership. In the beginning, it was difficult to identify the shareholder because funds used by NGOs to operate microfinance had been granted by international donors. But at the end staff association had been established as the owner of those funds, opening the way for NGOs to transform into MFIs.
In 2008, Cambodian microfinance has grown remarkably. This growth significantly contributes to economic development and poverty alleviation. With its credit and savings services, MFIs help people, especially the poor to relieve their family burdens and improve their livelihood to some extent.
The regulations include criteria for licensing and registration, minimum capital requirement, solvency ratio, liquidity ratio, uniform chart of accounts, reporting requirements, and interest calculation. These regulations are consistent with the scope of work of MFIs and support them in expanding their activities in an appropriate manner.
List of the 18 licensed Micro Finance Institutions (Dec. 31, 2008)
1. AMRET Co Ltd.
2. Hatthakaksekar
3. Tong Fang Micro finance
4. Thaneakea Phum Cambodia
5. Sathapana Cambodia Entrepreneur Building Ltd.
6. Seilanithih
7. Angkor Microheranhvatho Kampuchea
8. Vision Fund (Cambodia) Ltd.
9. CREDIT Co. Ltd.
10. Prasac Micro Finance Institution
11. Farmer Union Dev.Fund
12. Cambodia Business Integrate in rural Development
13. Maxima Mikroheranhvatho
14. Intean Poalroath Rongroeurng
15. CHC Limited
16. Entean Akpevath Pracheachun
17. Farmer Finance Ltd.
18. Green Central Micrifinance
