Cambodia's Banking, Financial Associations Adopt New Rules to Strengthen Business Operations
The new rules aim "to ensure a solid, sustainable, highly responsible banking and financial sector with robust consumer protections," the statement said.
"Banking and financial institutions are prohibited from accepting certain types of collectively-owned land as collateral for new loans," the statement said. "This includes state private land, public state land that is already registered, indigenous community land, collective land, land under the jurisdiction of the APSARA Authority, wildlife sanctuary land, protected area land, corridor land, and other protected lands."
"These categories of communally-held or state-owned lands are not to be accepted as security for new loan agreements," it added.
In case an institution is holding collateral for those types of land, the institution should never use coercive sales methods or encourage customers to sell those lands, the statement said.
The banking and financial institutions are also strictly forbidden to accept personal identification documents, including national identity cards, family books, residence books, passports, birth certificates, and equity cards (ID Poor) for credit collateral, it added.
"When providing loans to households who hold the equity card (ID Poor), banks and financial institutions must conduct a thorough and accurate assessment of the borrower's ability to repay the loan," the statement said.
"Lenders should avoid approving loan amounts that could lead to over-indebtedness or excessive debt burdens for these households," it added.
According to the statement, to continue promoting financial inclusion for individuals and communities utilizing collectively-owned land, such as state private land and publicly registered state land, the two associations encouraged all member institutions to continue providing credit to these borrowers through unsecured lending approaches.
"Additionally, lenders should carefully assess the repayment capacity of these borrowers to ensure loan terms are aligned with their financial circumstances, even in the absence of traditional collateral," the statement said.
Cambodia has 59 commercial banks, nine specialized banks, 87 microfinance institutions, and 115 rural credit institutions across the country, with 21.3 million deposit accounts and 4 million credit accounts, according to the National Bank of Cambodia (NBC), or the central bank.
The kingdom's banking and financial institutions had lent 58.9 billion U.S. dollars to customers as of June this year, as they accepted 51.9 billion dollars in deposits, the NBC said.
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