NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, March 27, 2017

Microfinance institutions will not object to an 18 percent cap on interest rates which comes into effect on April 1, a senior official from the Cambodia Microfinance Association said. Association president Hout Ieng Tong said yesterday they would not seek a rise in the rate because the government had considered the issue thoroughly before ordering the cap.

He said also that the National Bank of Cambodia (NBC) and the Finance Ministry had suggested solutions and mechanisms to make it easier for MFIs to manage the issues. He said that after the cap was announced, the association feared the withdrawal of capital by shareholders and lenders.

However after meeting these groups, the cap rate was no longer an issue. In addition, MFIs will try hard to cut operational costs.

“We will try to invest and strengthen our ability to keep our income strong even after implementation of the interest cap,” Mr. Ieng Tong said. Mr. Ieng Tong said that the NBC will consider mechanisms the association asked for to help facilitate MFI operations.