This is the 42sd anniversary of the re-establishment of the National Bank of Cambodia. Khmer Times took the opportunity to host a question-and-answer session with Oeur Sothearoath, Managing Director of Credit Bureau Cambodia.
KT: What do you think of the regulatory role of the National Bank of Cambodia (NBC) during the Covid-19 pandemic?
Operating system : 2020 has been a difficult year for the financial sector as well as for the economy in general in Cambodia. NBC took a series of measures early on to manage the impact of the Covid-19 pandemic, which has helped maintain the liquidity and resilience of the financial sector.
First, reducing the reserve requirement ratio (RRR) to 7% aimed at increasing liquidity was beneficial with an estimated increase of $ 1.8 billion in liquidity in 2020, thus allowing financial institutions (FIs) to expand permanently lending credit to borrowers and also supporting loan restructuring.
Second, NBC issued a directive in March 2021 to put in place mechanisms in all FIs to facilitate loan restructuring to borrowers affected by the pandemic to ease their burden, which has been extended until the end of 2021. As of August 2021, more than 590,000 loans were restructured for at least $ 5 billion, indicating the impact on a large number of individuals and businesses across the country.
Third, the microprudential regulations put in place by the BNC over the past two decades, such as increasing minimum share capital and liquidity coverage ratios, have also allowed the industry to remain resilient during the pandemic.
KT: In what ways has the CBC supported NBC’s actions and initiative related to pandemic management?
Operating system : As the key financial infrastructure and the only provider of credit assessment services in the country, the BCC provides accurate and timely reporting to the BNC as part of the financial supervision and monitoring of the stability of the sector.
As soon as the BNC issued the Loan Restructuring Directive, the CBC took immediate steps to put in place mechanisms for member FIs to report to the CBC activities on restructured loans, which would be duly recorded in the track record. borrowers’ credit.
In addition, despite the pandemic, the CBC has adopted effective business continuity measures to ensure uninterrupted access to credit reports for members and to ensure a robust assessment of credit risk in the market.
During the pandemic, the CBC also provided several relevant consultations and reports to inform policy research and impact assessment with several institutions engaging with NBC such as, but not limited to, the Monetary Fund international, AMRO [The ASEAN+3 Research Office], the World Bank, the Asian Development Bank and JICA [the Japanese International Cooperation Agency]. In addition, the CBC has played a supporting role by regularly providing data and analysis to the Cambodian Microfinance Association and the Association of Cambodia Banks to facilitate their discussions and policy advocacy engagements.
KT: What role does the BNC play in promoting credit market transparency and credit risk management in Cambodia?
Operating system : The BNC is the main catalyst in promoting credit market transparency and credit risk management in Cambodia. In 2011, NBC released its first credit reporting prakas paving the way for the establishment of Cambodia’s first credit bureau in 2012 to develop a comprehensive credit reporting system to fill critical information gaps between lenders. and borrowers and subsequently promote credit risk management and financial inclusion.
The BNC also closely supports the work of the BCC by enabling all financial institutions to adopt regular data contribution and constantly improve data quality for strong and accurate reporting systems. To keep up with changing trends in credit reporting and financial data analysis around the world, NBC revised the prakas last year in 2020, which opens up new avenues for the CBC to tap into sources. optional data to further diversify our data sources and strengthen adoption of data-driven decision making across the financial industry.
KT: How does the CBC support the growth and resilience of FIs?
Operating system : The CBC supports all FIs in the country through the BNC Credit Reporting Prakas to promote credit market transparency, credit risk management and financial inclusion. As the only provider of credit assessment services in the country, CBC plays a key role in bridging critical information gaps between lending FIs and borrowers by managing a comprehensive and secure reporting infrastructure that records track records. credit ratings of all borrowers in the financial sector far beyond what each FI would be able to capture on their own.
This data and information is important for FIs to assess the credit risk and creditworthiness of their potential and existing borrowers. By addressing information symmetry, CBC enables FIs to provide better access to credit and financial services to borrowers. Over the past few years, the CBC has developed strong advanced data analysis capabilities that FIs use for credit risk monitoring and strategy development, as well as their internal portfolio-level risk management system. and institutions. The CBC is also ideally placed to allow FIs to compare their risk levels and performance with sector and industry, which adds significant value to increasing the resilience of FIs, especially in times of uncertainty. during the pandemic.