A man holds a Cambodian national identification card last year in Phnom Penh. Hong Menea
IDs are not ‘sufficient guarantee’ for loans
Mon, 14 March 2016 ppp
Sor Chandara
Cambodia’s central bank has asked all financial institutions, especially rural lenders, to refrain from accepting personal identity cards, residential records and family books as a guarantee while giving out loans to consumers.
In a circular released on Friday, the National Bank of Cambodia (NBC) said the use of documents like a personal identity card or family book – a record of members in a particular family – could not be used as a guarantee, given that they had no “economical value” and was against banking regulations.
“ID cards, family books or residence books are authentic letters issued by authorities only for personal identification,” the circular read. “All banking and financial institutions and rural creditors must immediately stop taking such documents to ensure a loan.”
The NBC added that lenders who continued to accept these documents would be penalised under the banking and financial institutions law.
Sim Senacheert, president and CEO of Prasac, one of the country’s largest microfinance institutions, said formal lenders do not use these documents to guarantee a loan but only as identification proof.
Using these documents, he said, puts lenders themselves at risk, given that identity proof gives no indication of a customer’s financial background. He added that the practice was common among unlicensed lenders but with subsequent crackdowns by the NBC there are fewer cases now.
“When informal lending increases, formal lenders cannot evaluate the debt repayment capacity of a client because the loan is not registered in Credit Bureau system,” said Senacheert. “We don’t know how much the client can borrow and we do not know if they are in debt.”
1 comment:
national bank of cambodia is actually owned by the rothchilds family and a few others just like all the central/national banks around the world [ not khmer people ]...double cross the families and your country will be invaded to remove the '' dictator ''--- maybe it will be a good thing if hun sen decides to double cross them... but seriously , a leak e-mail of hillary clinton has shown that they went in to get gaddafi because they wanted his gold-- not because he is a dictator [ he also owned Libya national bank which was about to issue paper/fiat money backed by gold ] the US dollar used to be that way -- back by gold -- until Nixon took it off the gold standard so he could ask central bank to print as much paper money as he needed to finance the vietnam war.. with gold back currency, central can not print any amount of money as they want -- like now -- for example , at today gold price [ 1200 per ounce ] to print that new money into existence central bank has to show that they just got ONE ounce of gold out of the ground..nowadays all central bank don't have too -- just turn on the machine and they friends and families can used that newly printed fiat currency to buy the world.
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