Proposed credit bureau to regulate lending

National Bank of Cambodia aims to have the bureau – which it says will manage the Kingdom’s microfinance institutions and establish a national financial database – up and running by 2011Cambodia's central bank will establish a credit bureau to manage microfinance lending and avoid loan duplication by 2011, a senior official said last week.

National Bank of Cambodia Director General Tal Nay Im said the bureau would allow the country's microfinance institutions (MFIs) to submit lending details into a national financial database accessible across the sector.

It would prevent clients' using one piece of collateral, usually soft title on property, to apply for loans at more than one lender, a practice which has been linked to a rising incidence of non-performing loans in the sector.Many rural borrowers do not have [hard] land titles, so they use papers recognising their possession of land as collateral to borrow money from a financial institution," she said.

"Later, they ask the local authority to issue two or three more papers for the same land or house and use them to borrow from other microfinance institutions." Click to read more...