Two associations representing microfinance institutions (MFIs) and banks in Cambodia released a joint statement on Wednesday agreeing to grant borrowers a stay on loan and interest repayments in the latest and deadliest coronavirus epidemic from the country.
The Cambodian Microfinance Association (CMA) and the Association of Banks in Cambodia (ABC) made the announcement a day after more than 100 NGOs called on the Cambodian government to order MFIs and lenders to suspend debt collection. debt and interest for at least three months to give borrowers the ability to shelter at home as the country struggles to contain a viral spread first discovered in late February.
Cambodia, which had remained largely free from the coronavirus in 2020, recorded its first death from COVID-19 – the disease caused by the virus – last month, one year to the day as the World Health Organization called it a pandemic. Since then, 22 people have died and the number of cases in Cambodia has reached more than 2,900 people.
In Tuesday’s statement, NGOs noted that borrowers are unable to avoid potential exposure to the coronavirus because they fear losing their land or home if they cannot repay their debt. In particular, they pointed out that even though lenders temporarily suspended loan principal repayments, they continued to collect accrued interest, allowing them to collect ârecord profitsâ over the past year.
On Wednesday, the CMA and ABC said about 340,000 people had been able to restructure loans totaling some US $ 4 billion since the start of the pandemic and that they would continue to help restructure loans according to their needs. clients.
Additionally, they said, customers who have tested positive for COVID-19 or who are in quarantine will benefit from temporary withholding of principal and interest.
“These customers infected with COVID-19 will not be charged interest or fines for at least a month and their loans will be automatically restructured,” the statement said.
“They will also be allowed to delay principal payments for three months, provided they have proof of infection.”
Customers in quarantine will be allowed to restructure their loans as well as defer interest and principal for one month, the associations said, adding that they would not be fined for late payment.
The CMA and ABC also pledged to inject more funds to reduce interest rates, restructure loans and waive all fines for first-time homebuyers, and to grant the ” sorry âto those who died, without specifying how.
“Long-term business partners”
CMA spokesman Kaing Tonnggy told RFA’s Khmer service in an interview on Wednesday that the February 20 epidemic in the country had worsened, his association made efforts to introduce more measures. to help patients with COVID-19 in recent weeks.
âIf we know the client has been affected by COVID-19, we will contact them by phone and, with their consent, restructure their loans,â he said.
Kaing Tonnggy said MFIs and banks view their clients as âlong-term business partnersâ and are therefore willing to take a loss to help them.
âIf they win the hearts of customers, customers will continue to support their businesses in the future,â he said.
Following the appeal launched on Tuesday by more than 100 NGOs, government spokesman Phay Siphan told RFA the demands were impossible to honor because “Cambodia is a free economic market”.
He said debtors and creditors need to figure out a way forward between them.
âPeople cannot rely on the government because they did not consult us when they took out the loans,â he said. “They must be responsible for their own destiny.”
Reported by the Khmer service of RFA. Translated by Samean Yun. Written in English by Joshua Lipes.