The two associations representing microfinance institutions (MFIs) and Cambodian banks released a joint statement on Wednesday agreeing to grant borrowers money from loan repayments. and interest in the wake of the country’s latest and most dangerous coronavirus outbreak.
The Microfinance Association of Cambodia (CMA) and the Association of Banks in Cambodia (ABC) issued an announcement a day after more than 100 NGOs urged the Cambodian government to direct microfinance institutions and Lenders suspend debt and interest collection for at least three months to allow borrowers. The possibility of shelter at home as the country struggled to stop the spread of the virus was first discovered in late February.
Cambodia, which was virtually unaffected by coronavirus in 2020, recorded its first death from COVID-19 – a viral disease – last month, a year until the day of the Organization of Health. The world considers this an epidemic. Since then, 22 people have died, and the number of deaths in Cambodia has risen to more than 2,900.
In a statement Tuesday, NGOs noted that borrowers could not avoid the possibility of coronavirus exposure because they feared losing their land or home if they failed to repay the debt. In particular, they point out that while lenders are suspending principal repayment, they continue to collect accrued interest, allowing them to reap “record profits” over the past year.
On Wednesday, CMA and ABC said around 340,000 people have been able to restructure loans totaling around US $ 4 billion since the start of the pandemic and they will continue to support the restructuring borrowing based on customer needs.
In addition, they said, customers who test positive for COVID-19 or are on quarantine will be temporarily exempt from principal and interest payments.
“Customers infected with COVID-19 will not be charged interest or fined for at least a month and their loans will be automatically restructured,” the statement said.
“They will also be allowed to delay original payments for three months, as long as they have proof of infection.”
Quarantine customers will be allowed to restructure their loans as well as delay interest and principal payments for one month, the association said, adding that they won’t be penalized for late payments.
CMA and ABC also pledged to pump more funding to lower interest rates, restructure loans and waive all fines for first-time homebuyers, and “forgive” those who have passed away. – without specific explanation of how to do it.
‘Long-term business partner’
CMA spokesman Kaing Tongngy told RFA’s Khmer Service in an interview Wednesday that as the country’s February 20 outbreak worsened, his association was working to offers more support for patients with COVID-19 over the past few weeks.
“If we know customers have been affected by COVID-19, we will contact them by phone call and with their consent, restructure their loans,” he said.
Kaing Tongngy says that MFIs and banks consider their customers “long term business partners” and are therefore willing to take losses to help them.
“If they win the hearts of customers, customers will continue to support their businesses in the future,” he said.
Following the call of more than 100 NGOs on Tuesday, government spokesman Phay Siphan told RFA that these requests were impossible because “Cambodia is a free economic market”.
He said creditors and creditors need to define a way forward between them.
“People cannot rely on the government because they didn’t consult us when they borrowed money,” he said. “They need to take responsibility for their own destiny.”
Reported by RFA’s Khmer Language Service. Translated by Samean Yun. Written in English by Joshua Lipes.