The Association of Banks in Cambodia (ABC) and US-based Social Performance Task Force (SPTF) on April 5 signed a memorandum of understanding (MoU) for a strategic partnership intended to promote responsible inclusive finance in the Kingdom, according to a joint statement dated April 9.
This comes about eight and a half months after SPTF – which reportedly has more than 3,000 members from all over the world – signed a similar MoU, on “Strengthening Responsible Inclusive Finance in Cambodia” with the Cambodia Microfinance Association (CMA) on July 22.
“This MoU provides a framework to intensify the cooperation between the two parties to strengthen responsible inclusive practices from a risk management perspective to promote responsible growth, enhance financial stability and increase consumer protection in Cambodia,” the statement said.
“The [ABC] and SPTF agreed to cooperate in a number of areas, including supporting members in successfully adopting the BFIs’ [banking and financial institutions] Code of Conduct [CoC]; [and] supporting members in assessing compliance with [the BFI CoC], and identifying areas for improvement.
“[Other areas include] monitoring the progress and challenges of the adoption of the [CoC] in the banking system via use of the [CoC] and CP Standards harmonised tool; [and] building the capacity of the members to implement the client protection practices in the [CoC].
“The commitment of ABC members also includes increasing the financial awareness and literacy of the Cambodian people and improve their approach to client protection,” it said.
Speaking in the statement, ABC chairman Raymond Sia Say Guan stressed that banking “is built on trust and confidence with our customers – consumer protection is an important part of banking.
“The MoU signing ceremony with SPTF would contribute to empowering client protection in Cambodia and also reinforcing the strength and reputation of our banking industry.
“We call out to all our members to adhere to the principles of the [BFI CoC] and into their policies and procedures,” he said.
Nitin Madan, director of SPTF’s Responsible Inclusive Finance Facility for Southeast Asia (RIFF-SEA) added in the statement that “our work with ABC will include a substantial number of capacity-building workshops on governance and tools for strengthening client protection in banks in Cambodia.
“In addition, I offer my most sincere thanks to the Government of the Grand Duchy of Luxembourg, whose steadfast commitment to our work in Cambodia has been decisive in our ability to create impact,” he said.
Launched in May 2018, RIFF-SEA is funded by the Luxembourgish foreign ministry, according to SPTF.
In a congratulatory speech, National Bank of Cambodia (NBC) banking supervision deputy director-general Heng Bomakara said the deal “will help pave the way of fostering the effective implementation of the [BFI CoC] with the target of promoting responsible growth, improving financial stability and increasing customer protection.
“Consumer protection is a prioritised task that all related parties must take into high consideration in order to maintain the public’s confidence and promote financial inclusion in Cambodia while also maintaining the overall stability of the banking system,” he said.
For reference, in its 2022 annual report, the NBC indicated that Cambodia’s formal “banking” system comprised 59 commercial banks; nine specialised banks; five deposit-taking MFIs (microfinance institutions); 82 non-deposit-taking MFIs (MDI); 224 rural credit institutions; 16 financial leasing companies; five third-party processors; 34 payment service providers; one credit information sharing service provider; six foreign bank representative offices; and 2,869 money exchange businesses.
At end-2022, the total loan balance stood at 229.5 trillion riel – or $56.1 billion – growing 20.2 per cent on-year, the NBC said. Similarly, the Credit Bureau (Cambodia) Co Ltd (CBC) reported that the total number of loan accounts reached 1.54 million nationwide in December, rising by 3.45 per cent “from the previous quarter”.
