Phnom Penh (FN), Aug. 16 —The Association of Banks in Cambodia (ABC) and Cambodia Microfinance Association (CMA) are pleased to inform the public that to ensure a solid, sustainable, highly responsible banking and financial sector with robust consumer protections, the Council of the Association of Banks Cambodia (ABC) and the Board of Directors of Cambodia Microfinance Association (CMA) have adopted new rules for all members of the two Associations to strengthen responsible business operations and consumer protection, as outlined in the details that follow:

1.  Banking and financial institutions are prohibited from accepting certain types of collectively-owned land as collateral for new loans. 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.

2.   In case the institution is holding collateral for those types of land, the institution:
a.   Never use coercive sales methods or encourage customers to sell those lands.
b.  The title deed issued as collateral for the loan must be returned to the customer after the loan repayment is completed.

3.  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.

4.  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. Lenders should avoid approving loan amounts that could lead to over-indebtedness or excessive debt burdens for these households.

5.  To continue to promote financial inclusion for individuals and communities utilizing collectively-owned land, such as state private land and publicly registered state land, the Council of the Association of Banks Cambodia and the Board of Directors of the Cambodia Microfinance Association encourage 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 two Associations has reiterated that the above-mentioned rules are the additional mechanism to the existing mechanism to ensure banking and financial sector remain resilient, stable, responsible and protected the customers.
=FRESH NEWS