Cambodia Investment Review
The National Bank of Cambodia (NBC) and the United Nations (UN) convened the second high-level multi-stakeholder dialogue on January 23, 2025, to assess progress on reforms in Cambodia’s microfinance sector. The initiative, launched in November 2023, aims to address challenges such as over-indebtedness, improve responsible lending standards, enhance consumer protection, and explore innovative insurance solutions for vulnerable communities.
This dialogue follows the inaugural meeting in July 2024, which outlined 22 priority actions for stakeholders in the banking and financial sectors. Progress has been substantial, with four actions completed, 15 underway, and three in the initial stages. The consultation has engaged over 100 representatives from government, regulatory bodies, financial institutions, civil society, and international organizations.
Key Milestones in the Microfinance Sector
- Strengthening Responsible Lending Practices
Major strides include enforcing the Code of Conduct and implementing the Consumer Protection Harmonization Assessment Tool. Lending restrictions now prohibit the use of Indigenous Communal Land Titles (ICLTs) as collateral and prevent forced sales of such titles. Borrowers can now access online information about registered ICLTs and state-owned lands, enhancing transparency and safeguarding property rights. - Aligning Incentives for Financial Institutions
Revised performance indicators for financial institutions now align with responsible lending principles, prioritizing borrower protection and minimizing harm. - Enhancing Legal Safeguards
A joint statement has been drafted to strengthen regulations against the misuse of identification documents, such as equity cards and family books, in lending practices. - Expanding Consumer Protection Mechanisms
A Financial Consumer Centre has been established under the Association of Banks in Cambodia and the Cambodia Microfinance Association. This initiative, combined with independent debt mediation and financial literacy programs, aims to support borrowers facing debt-related challenges. - Developing a Data Ecosystem and Loan Restructuring Framework
Efforts are ongoing to establish a centralized data-sharing platform for financial institutions and to implement loan restructuring measures, focusing on borrowers with financial difficulties. - Innovative Insurance Pilot Programs
A pilot project for climate risk and crop insurance has been launched in partnership with agricultural cooperatives and private sector stakeholders. The program aims to empower indigenous communities through better access to credit and market opportunities.
A Commitment to Inclusive Growth
Stakeholders reaffirmed their commitment to fostering a transparent and sustainable banking ecosystem that promotes financial inclusion and supports Cambodia’s most vulnerable populations. The next consultation is scheduled for August 2025, with a continued focus on addressing systemic challenges and advancing progress in the microfinance sector.
For more information, contact the National Bank of Cambodia or the UN Resident Coordinator Office.
