End public confusion, lenders told

KHMER TIMES
SOK CHAN

Banks have been requested to display prominent signs indicating that they are private institutions. KT/ Fabien Mouret

Microfinance and banking institutions are adding the term “private institution” on signs and stickers inside and outside their premises, aiming to end people’s confusion that the institutions are public entities.

During the inauguration ceremony of a new temple at Prek Pra pagoda last Wednesday, Prime Minister Hun Sen called on banks, microfinance institutions and rural credit operators to verify themselves as private institutions and show that loans they gave out were from private companies, not the government.

“Microfinances, whatever their names are, are not there for the government,” said Mr. Hun Sen.

“In the past years Cambodian people have been confused that this or that microfinance institution is there for the government and the government always gets the interest and confiscates people’s land and houses,” he added.

“I call on all microfinance institutions and banks to verify that they are private and for the National Bank of Cambodia to get this task done properly.”

In response, National Bank of Cambodia (NBC) governor Chea Chanto called the same day for an urgent meeting between the financial regulator and MFI and bank representatives.

The NBC had decided that all signboards with MFIs and banks’ names should include the words “private institution” , and the signs should be displayed in a prominent location, he said.

“They must let people understand clearly the credit culture and that what they borrow is from banks and MFIs, not from the government,” Mr. Chanto said.

Hout Ieng Tong, president of the Cambodian Microfinance Association and the CEO of Hattha Kaksekar Limited, one of the largest MFIs in Cambodia, said he welcomed the NBC decision to verify that MFIs were private.

“We have started doing it, but each MFI has many branches and offices, so these tasks may take some time,” Mr. Ieng Tong said.

“I believe that our credit officer has clearly explained that credit offered by MFIs and banks is totally from a private instution. Also he will identify who is their creditor,”he said.

LOLC (Cambodia) Plc. CEO Sok Voeun said his instistution complied with the NBC’s direction, and by this week the sign “private institution” will be inside all the 73 branches and offices.

Signs outside the institution will take another week to be completed.

So Phonnary, executive vice-president of Acleda Bank, said that Acleda has prepared the format of branding and private terms for all 259 branches and offices across the country to comply with the NBC.

“Generally, we always advise our customers that we are a private company, not a public company, and we always inform customers that they will pay back loans to the bank and not the government. We have done this for a long time,” Ms. Phonnary said.

Ms. Phonnary said that it takes time to explain the difference to people, but sometimes the name of MFIs and banks are long which made it difficult for ordinary people to remember them.

“Because of this, people might say in brief that they are getting a public loan, but in reality the loan is from a private bank.”