MICROCAPITAL STORY: Cambodian Credit Bureau To Be Launched for Regulating Banking and Microfinance

Regulators in Cambodia are planning the creation of the nation’s first credit bureau to link the country into a national financial database, it was reported in the Phnom Penh Post. The credit bureau would act as a registry for the details of all loans which would be submitted by microfinance institutions (MFIs) in Cambodia. While the report did not specify which authorities will launch the credit bureau, The International Finance Corp, a member of the World Bank Group, and the National Bank of Cambodia, Cambodia’s Central Bank, made statements regarding the need for the bureau and the desired date for the launch, which is in April 2010, while Angkor Microfinance Kampuchea (AMK) and ACLEDA Bank also spoke about the benefits of regulation in the microfinance sector. The motivation for the creation of a credit bureau has been brought on by the global credit crisis as its effects expand to Cambodia, combined with the rapidly growing banking sector.

Margarete Biallas, program manager for the Access to Finance IFC Advisory services spoke about the need and purpose for the bureau, saying “The [credit] bureau is mostly for microfinance institutions. As they grow and expand, they are increasingly having problems with clients who don’t tell them when they have a loan at other institutions”. Paul Luchtenberg, CEO of AMK spoke about Cambodia’s microfinance climate saying, “Cambodia’s registered microfinance institutions are cheaper and more reliable than unregulated money lenders and pawn brokers who charge very high interest rates. We are also accountable to the government and shareholders, ensuring high standards of service, governance, and transparency.”

Representatives from other MFIs spoke about the challenges faced when disbursing microfinance due to the lack of a unified database. ACLEAD Bank spoke about the benefits of having an institution which will “help with transparency” and “encourage discipline in customers”, however doubted the logistic capabilities for regulating such large numbers of people who often lack identification or spell their names in different ways.

The International Finance Corporation (IFC) is an intergovernmental organization launched in 1956. It is a member of the World Bank Group and its main objective is the promotion of private enterprise. The IFC finances private sector investment, mobilizes capital in the international financial markets, and provides advisory services to businesses and governments. The IFC’s net worth as of June 2008 totalled USD 18.3 billion.

Acleda Bank is ACLEDA was established in 1993 as an NGO microfinance institution, reliant on international development agencies. By August 2000, it had expanded to over 14 of the 24 provinces in Cambodia, and was able to operate at a profit. In October 2000, ACLEDA was given a bank license by the National Bank of Cambodia. MicroCapital has reported on past ACLEDA accreditations, awards, and investments.

Angkor Microfinance Kampuchea (AMK) AMK is a Cambodian MFI that originated from the savings and credit development work done by Concern Worldwide, an NGO dedicated to humanitarian efforts and poverty alleviation. The savings and credit program from which AMK is created was founded in 1999, but AMK did not become an independent organization until 2003. The most recent financial data from the MIX shows AMK had total assets USD 12.3 million at the end of 2007, with a gross loan portfolio of USD 10.3 million. The MFI had a return on equity of 24.71 percent and a return on assets of 8.64 percent. As of 2007, AMK had 120,111 active borrowers, with 84.5 percent of these borrowers being women.

By Lori Curtis, Research Assistant

MICROCAPITAL STORY: Cambodian Credit Bureau To Be Launched for Regulating Banking and Microfinance

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