The pm is sounding more and more desperate each day.
http://www.phnompenhpost.com/national/m ... est-capped
MFI loan interest capped
Tue, 14 March 2017
Kong Meta, Hor Kimsay and Erin Handley
The National Bank of Cambodia (NBC) has capped interest on microfinance loans to a maximum of 18 percent per year, an unprecedented move that came on the direct orders of Prime Minister Hun Sen, Defence Minister Tea Banh said yesterday – a decision some experts suggested had political overtones and could have unintended negative consequences for the poor.
The step, which will nearly halve what some microfinance institutions (MFIs) currently charge, comes in the wake of a recent campaign by the government to publicly distance themselves from lenders by forcing nationwide overhauls of bank and MFI logos, and to declare it “illegal” for any party to promise to cancel MFI debts.
Reached yesterday after a speech delivered on Sunday to more than 800 ruling party commune candidates in Siem Reap, Banh said that while the issue fell outside his defence portfolio, he was speaking on behalf of the premier, who floated the populist rate cap in November.
“I just [repeated] the words of the premier, [who ordered] the bank to restrict the MFI to set the [maximum] interest rate at 18 percent. The bank will do it,” he said.
The NBC made good on Banh’s pledge just hours later, announcing yesterday afternoon that the new rate ceiling would be imposed on all MFIs from April 1, in what appears to be a direct contradiction to advice from one of the bank’s economic researchers, Leng Soklong, who only three months ago warned an interest rate cap was bad policy.
According to the 2016 annual report of the NBC, 1.9 million MFI clients took out a total of $3 billion in loans, making the average loan about $1,500.
AMK CEO Kea Borann said a loan of that size would attract an interest rate of 25 to 30 percent per year, depending on individual risk. The bank’s new directive will mean the maximum that MFIs can charge will be severely curtailed.
Banh stressed the move was “not connected” to the upcoming elections in June, but was instead about “relieving the burden” of those who borrow and struggle to pay back loans in the face of too-high interest rates.
“I think the people will be happy with us, because we really care about them,” he said.
According to the 2016 annual report of the NBC, 1.9 million MFI clients took out a total of $3 billion in loans, making the average loan about $1,500.
AMK CEO Kea Borann said a loan of that size would attract an interest rate of 25 to 30 percent per year, depending on individual risk. The bank’s new directive will mean the maximum that MFIs can charge will be severely curtailed.
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