Greed and Power

[Abou-Gor]

But no one's going to loan money to poor people at 10% a year. They're terrible credit risks.

very much the opposite actually. less than 1% default rate according to an mfi regulatory body.
time and time again over the last 30 plus years they have been shown to be low credit risks.
then why the high interest you ask?

Fancy backing this statement up?

In my experience it's just not true, I'll post a bit of an explanation later when I have time.

it's in todays cd article i posted the link to above. but i have the same data from different mfi bodies/ countries if you want.

[YaTingPom]

i bet you still wear shorts.

Yes. I had them made by children in a sweatshop whilst their parents toiled away in a rice paddy and the mother sold her tired frail body to barangs - with no morality - to pay off their debt to one of those evil Nazi MiFis.

[ផោមក្លិនស្អុយ]

But no one's going to loan money to poor people at 10% a year. They're terrible credit risks.

very much the opposite actually. less than 1% default rate according to an mfi regulatory body.
time and time again over the last 30 plus years they have been shown to be low credit risks.
then why the high interest you ask?

Fancy backing this statement up?

In my experience it's just not true, I'll post a bit of an explanation later when I have time.

it's in todays cd article i posted the link to above. but i have the same data from different mfi bodies/ countries if you want.

Ah, you posted it subsequent to the comment I replied to. The article kind of contains the explanation I was going to give.

1. Recycling/restructuring of debt keeps default rates low. Artificially so.
2. Banks are self reporting. It's in their interest to report low default rates.
3. Definition of default. Some places use very generous definitions. It should be >3 full month payments in arrears. Some places use >6 months.
Some places work hard to keep the arrears just less than the default threshold meaning whilst the borrower is practically in default. Technically they are not.
4. Indebtedness. Maintaining very low default rates whilst an increase in indebtedness tells a story. It's not hard to read between lines.

The stats you use to support your argument are called into question in the article. Are you blind to that?

I do believe that MFI's need greater regulation - but am against the rate cap.
A couple of things which could help:
1. Compulsory reporting to credit bureaux - and use of the data within credit assessment.
2. Standardising of reporting definitions
3. Using a separate product type for debt restructuring which would be reported separately from 'standard' loans.

That's just a start. Things would be different if I was in charge!

[Abou-Gor]

But no one's going to loan money to poor people at 10% a year. They're terrible credit risks.

very much the opposite actually. less than 1% default rate according to an mfi regulatory body.
time and time again over the last 30 plus years they have been shown to be low credit risks.
then why the high interest you ask?

Fancy backing this statement up?

In my experience it's just not true, I'll post a bit of an explanation later when I have time.

it's in todays cd article i posted the link to above. but i have the same data from different mfi bodies/ countries if you want.

Ah, you posted it subsequent to the comment I replied to. The article kind of contains the explanation I was going to give.

1. Recycling/restructuring of debt keeps default rates low. Artificially so.
2. Banks are self reporting. It's in their interest to report low default rates.
3. Definition of default. Some places use very generous definitions. It should be >3 full month payments in arrears. Some places use >6 months.
Some places work hard to keep the arrears just less than the default threshold meaning whilst the borrower is practically in default. Technically they are not.
4. Indebtedness. Maintaining very low default rates whilst an increase in indebtedness tells a story. It's not hard to read between lines.

The stats you use to support your argument are called into question in the article. Are you blind to that?

I do believe that MFI's need greater regulation - but am against the rate cap.
A couple of things which could help:
1. Compulsory reporting to credit bureaux - and use of the data within credit assessment.
2. Standardising of reporting definitions
3. Using a separate product type for debt restructuring which would be reported separately from 'standard' loans.

That's just a start. Things would be different if I was in charge!

The stats you use to support your argument are called into question in the article. Are you blind to that?

no , i was pointing out that the world data from mfi companies says the same. thanks for explaining how they get their figures. high interest with low default rates just didn't add up. do they think it would discourage investors if they were more transparent?

[scobienz]

is it just me or is scobienx starting to sound like AIA in one of his petulant butt hurt moods. he'll most likely delete this post too.

You might want to remember that you were permanently banned for being a tedious bore posting the same shit over and over again before.

I turned a blind eye when you returned because until a week ago you were at least contributing here.

Now you're reverting to type. Keep it up SCC. Please. I'd like that.

[YaTingPom]

In other news I cashed in a Reil deposit account that I opened in 2014 when the $ exchange rate was 4050.
Converted it back to $ and the exchange rate was 4000. Profit!

I did briefly think of the poor that were going to suffer but then I saw the hard cash and just shrugged my shoulders. Gave a begger 1000 riel though. Now it has been spent...

Everyone wins!

[Rama]

Prasac just been taken over in 'monster deal' http://m.phnompenhpost.com/business/mic ... nster-deal

I'm not worried about any of my deposits, nor do I feel any remorse or qualms about saving with Cambodian MFIs.
I've been profiting off of them quite nicely for 6 or 7 years now, at a minimum of 10% p.a, probably an average of 11%.

[YaTingPom]

Win!

[ផោមក្លិនស្អុយ]

In other news I cashed in a Reil deposit account that I opened in 2014 when the $ exchange rate was 4050.
Converted it back to $ and the exchange rate was 4000. $125 profit!

I did briefly think of the poor that were going to suffer but then I saw the hard cash and just shrugged my shoulders. Gave a begger 1000 riel though.

Everyone wins!

I was thinking about this yesterday. If you hold a riel account and $ account then as long as there are no withdrawal penalties you can shift money between the two as the exchange rate fluctuates.
Before KNY it's always low, then 6 weeks later it recovers - could easily be 1.5% movement within 4-6 weeks...
It's not much but could be easy money.

[YaTingPom]

Well that's like being a Forex trader which is quite risky!
I bought GBP over in November 2014 when it was $1.56. If I could be arsed I could send it all back again and even with fees I would be 20% up.

I know a chap who exchanged £500k at the same time (for a business deal that did not happen) and he sent it back via Forex for around $1.18 a few months ago, plus it earn't 8% while here, so he is up...erm...£190k (ish)!

Still didn't buy me a drink the tight bastid.

[RobW]

Well that's like being a Forex trader which is quite risky!
I bought GBP over in November 2014 when it was $1.56. If I could be arsed I could send it all back again and even with fees I would be 20% up.

I could be arsed and bought a house paying net 11%, as you say at a 20% discount. There my mathematical ability ends as the rent's paid in pounds obviously.

The money, Abou Ghour, will help me to be an all round good egg and a bunch of folks and me to have a laugh. See how evil capitalism is?

[YaTingPom]

Where has the douchebag gone anyway?

[Alexandra]

I was thinking about this yesterday.

[Abou-Gor]

bump

Trying to step back and see the bigger picture. First the government makes some MFIs change logos to clarify that they are not government-related. The aim apparently being to stop any misapprehension on the part of borrowers that the government is behind an organisation that is pursuing debt recovery of a (fairly) high interest loan. Now APRs >18% will be prohibited from 1 April. Existing loans are unaffected. I am struggling to see how this amounts to a populist move. As already stated, MFIs will simply withdraw from certain types of lending. Is the aim to level the playing field with the commercial banks? I know that interest rates >18% are unenforceable in Cambodian law, MFIs obviously had an exemption up to now. Do the commercial banks also enjoy an exemption?
It is interesting that all this is happening quick on the heels of big developments in the MFI industry. Some consolidations have taken place and some takeovers by foreign banks, Hatha by a Thai Bank and Sathapana by a Japanese company. Clearly some foreign investors came to see Cambodian MFIs as a very juicy proposition. Other new developments -Hatha say they are becoming a commercial bank, like Acleda, and will be reducing the rates paid to depositors. Also there are some new entrants, such as Mia Financial.

Incidentally, re the discussion on expat ownership of MFIs. True there is substantial foreign ownership of MFIs by companies, NGOs and supranational organisations (but not all Western foreigners as the above examples show). That is not the same thing as expat ownership.