MFI Prasac set to seek licence to take deposits

Photo by: SOVAN PHILONG

An AMK employee Thursday walks beneath a sign for a branch of the MFI in Phnom Penh. AMK applied to the central bank for a licence to receive deposits 18 months ago but is yet to get the go-ahead

via CAAI News Media

Monday, 01 February 2010 15:01 Nguon Sovan

Two others still await answer from National Bank of Cambodia

MICROFINANCE institution (MFI) Prasac will apply to the National Bank of Cambodia (NBC) this week for a licence to take deposits from the public.

Prasac general manager Sim Senacheert told the Post Sunday that he intends to ask the NBC for permission to provide a deposits service. The move is part of the MFI’s plan to become a commercial bank in five years, he said.

“We hope to get a licence within two months and launch the deposit-taking service by late March or early April,” he said. “We want to encourage people to get into the habit of saving money in MFIs in the future.”

He said that gaining capital from the local population is more “stable” for the MFI. Money is currently offered by foreign lenders at rates of up to 10.5 percent per year.

Prasac, however, intends to offer the public interest rates of around 8 percent and 6.5 percent for one-year deposits in riels and US dollars respectively. Six-month savings deposits will be offered at 5.5 percent and 5 percent respectively, said Sim Senacheert.

Although this is higher than rates offered by commercial banks, it is cheaper than foreign loans.

To gain a licence, an MFI must prove that it has carried out operations for more than three years, is in a good financial condition, has capital of at least 10,000 million riels (US$2.4 million), operates an effective management system, uses NBC charts of accounts, and has sustainable profitability.

Only two of the Kingdom’s 20 MFIs, Amret and Sathapana, have been granted a licence. Two more MFIs have applied for a permit, but have yet to hear back from the NBC.

Paul Luchtenburg, chief executive officer of micro-lender AMK, said Sunday that the company applied for a deposit-taking licence a year and a half ago but still has not been given the green light.

Hout Ieng Tong, general manager at Hattha Kaksekar Limited, said that he applied in December last year, but has yet to be approved by the NBC. The NBC could not be reached for comment. Clients “always keep their money at home, where it’s not safe. If they keep savings at MFIs, it would be safe and increases revenues at the same time, helping to drive economic growth”, said Hout Ieng Tong.

ACLEDA Bank started as an NGO micro-lender. In 2003, it was licensed as a commercial bank after tripling capital to $13 million.