Central bank orders lenders to step up lending in riel

Cambodian microfinance institutions have said they would comply with a new regulation issued by the central bank that requires them to hold at least 10 percent of their loan portfolio in the Kingdom’s national currency. A prakas published by the National Bank of Cambodia on December 1, requires all commercial banks and MFIs to adopt the measure over the next three years in order to promote riel usage, adding that the central bank could take any necessary action if needed to make lending institutions comply. Lay Kimchhen, CEO of Niron Microfinance Plc, said on December 6 the company had been notified about the new prakas and was taking steps to expand its use of the national currency. He insisted that Niron would not face issues implementing the policy as it already held riel and issued loans using it, but said it could prove challenging for some other microlenders. “This policy could prove difficult for MFIs that have foreign shareholders as they could face issues with currency exchange rate fluctuations,” he said.

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