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Banking & Finance

Here is an overview of the banking sector in Cambodia, the different types of banking institutions operating here and the various services available to corporate and domestic customers.

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  • In 1998, the National Bank of Cambodia (NBC) was established and was put under the Governorship of H.E. Chea Chanto.
  • Since then, Cambodia has seen many developments including the classification of banks, the requirement to issue annual reports, the establishment of a credit bureau, the creation of a stock market, the requirement of external auditors and increased minimum capital requirements.
  • Cambodia’s banking system continues to align with international institutions.
  • The Ministry of Economics and Finance as well as the National Bank of Cambodia (NBC) regulate banks and banking services.
  • The Association of Banks in Cambodia (ABC) represents the banking sector to the Royal Government of Cambodia and the ASEAN Bankers Association. The ABC includes international, local and government owned banks.
  • The International Monetary Fund (IMF) and World Bank also operate in Cambodia.
  • Cambodian banking is legislated by the Law on Banking and Financial Institutions (LBFI).
  • In 2014, with renewed political and economical stability, businesses across the country rebounded strongly.
  • Cambodian MFIs performed particularly well last year, delivering an average return on equity of 22 percent, making Cambodia’s MFI sector one of the best performing globally.
  • However, only 10-15% of the population is currently banked.

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  • The degree of competition within the banking industry has grown dramatically.
  • In Cambodia there are now around 36 commercial banks, seven specialist banks and 44 registered MFIs.
  • For customers, this means the cost of credit is cheaper and there are more channels to do banking business through.
  • There are more ATMs and branches across Cambodia and a wider range of available products, such as insurance being sold through banks.
  • The Association of Banks in Cambodia (ABC) released a Code of Banking Practice in February 2015.
  • The document outlines a set of best practice industry standards encouraging financial institutions to be more open with their customers.
  • The Code is said to reflect the protection mechanism for financial service users and provides rights for financial service users to complain banks or financial institutions on their services that they don’t like.
  • The move aims to foster confidence in the banking system and encourage a corporate culture of fair dealing.
  • The Code covers all services offered by a bank to its customers, from simple account operations to calculating interest rates on loans or credit cards.
  • Several Cambodian financial institutions voluntarily signed on to uphold the terms of the Code immediately.
  • It is hoped that all firms operating within the Cambodian finance industry will voluntarily adhere to the terms of the Code in future.
  • Opening a bank account in Cambodia is easy, provided you bring the correct documents.
  • These vary but generally include a copy of the applicant’s ID card or passport, proof of address and proof of income.
  • Corporate accounts require more documents, ranging from Certificate of Corporation and Memorandum and Article of Association to Certificate of Good Standing and Board Resolution.
  • Business customers can enjoy an additional range of services, such as payroll, letters of credit and foreign exchange.
  • An annual NBC report revealed the organisation fulfilled its mission as the country’s central bank in maintaining price stability with the 2013 inflation rate standing at about 4%.
  • Cambodia’s foreign reserves under the NBC management increased from $378 million 15 years ago, to more than $4,100 million at the start of 2014.
  • NBC says this is enough to cover more than four months of the country’s import, reaching the height of wealth Cambodia as a nation has ever achieved.
  • The report also reveals lending at Cambodian commercial banks rose by 26% to $7.4 billion in 2013 from $5.88 billion in 2012.
  • Cambodia still operates on a predominantly cash-based system, although credit and debit cards are becoming increasingly common.
  • Cards are now accepted at many large hotels, restaurants and other retail outlets.
  • There is a lack of equity or bond markets in Cambodia, which means alternative investment must often be sought through alternative avenues.
  • Finding venture capital and private equity firms for finance in Cambodia, is not as easy as the industry remains still fairly undeveloped.
  • Banks will only usually lend to customers with collateral, such as land, pushing most Cambodian small and medium enterprises (SMEs) out of the picture.
  • The micro-finance sector in Cambodia provides funding to smaller companies.
  • A credit bureau was launched in 2012 to promote transparency and help prevent credit risks associated with excessive lending to one borrower by different institutions.
  • The CBC provides commercial credit insight that helps Cambodian businesses reduce their costs, increase their revenues and reduce the risks associated with their credit portfolio.
  • CBC notification services allow users to track, analyse and take action quickly to reduce write-offs and identify additional revenue opportunities.
  • The monitoring service also helps safeguard Cambodian consumers and businesses from fraud using their investigation and identity authentication tools.
  • Although still in its infancy, the bureau has already made a huge impact on the economy, with tens of thousands of reports being made daily.
  • The Bureau is helping Cambodians to learn the benefits of good credit history, and the opposite—the damage of bad credit history.
  • The Cambodian credit bureau was launched in 2012 to promote transparency and help prevent credit risks associated with excessive lending to one borrower by different institutions.
  • The Cambodian credit bureau facilitates the development of new services that banks can offer their customers, and loans should steadily become more widely available without the requirement for borrowers to offer land or other items as security.
  • Although still in its infancy, the Cambodian credit bureau has already made a huge impact on the economy, with tens of thousands of reports being made daily.
  • The Cambodian credit bureau is a partnership between the National Bank Cambodia (NBC), all banks and Micro Finance Institutions (MFIs), and Veda Advantage, a leading global supplier of credit system technology.
  • Maintaining a central database of credit data enables banks and MFIs to share information relating to their customer repayment histories.
  • It also allows the Cambodian credit bureau to assist lenders in making accurate loan decisions.
  • There are limited options available for those seeking alternative forms of finance in Cambodia.
  • The finance industry in Cambodia is still relatively immature and start-up investment companies, venture funds or early “angel” investors are rare.
  • There has been a recent growth in private equity firms setting up in Cambodia specifically targeting both foreign and local SMEs but there remains a gap in the market.
  • The Cambodian Securities Exchange (CSX) opened in July 2011 as part of the implementation of the Financial Sector Development Strategy 2006-2015.
  • The exchange is regulated by the Securities and Exchange Commission but is owned by the Ministry of Economics and Finance which has a 55 percent share and the Korean Stock Exchange which has the remaining 45 percent share.
  • In order to trade, an investor must register with the SECC to receive an Investor’s ID then they may open a securities trading account or trade via a securities firm.
  • Foreign investors who have held residency in Cambodia for at least 182 days are eligible to receive tax breaks on any trades.
  • For any conflicts that may arise between investors and securities firms the SECC will arbitrate.
  • Any company wishing to list must satisfy SECC criteria. This includes three years of audited accounts, certain levels of financial security, to show profitability in previous years, a certain value of assets and certain future prospects. It is not a fast process—it takes months, and substantial expense.
  • Companies that list on the CSX before January 8, 2018, and the two companies already listed on the CSX, will receive hefty three-year tax breaks of 50 percent off their gross operations tax, according to a recent SECC announcement.
  • Exchange market confidence comes only with activity and diversity, and these factors are not independent—hence the new incentives from the SECC.
  • The bottom line is, people must see it as a worthwhile alternative to putting money in the bank: without the players, we have no game.

Banking Services in Cambodia

Commercial banks offer a range of services for individual and corporate customers in Cambodia.
Check out how they can help you!

  • Individual banking services include chequing and savings accounts, and foreign exchange services.
  • Some banks also offer credit cards, overdraft facilities and personal loans.
  • Credit card allowances usually have to be offset by cash funds held in a separate account, and loans will require collateral typically in the form of a land title.
  • Several banks now offer a payroll management service, saving customers time by allowing them to process payments directly to employees, creditors or other parties with a bank account to which funds can be sent.
  • During the last few years, the majority of the country’s main players in the banking world have launched online services to customers, offering various transactions, such as overseas and domestic money transfers and payroll payments.
  • Retail businesses can also take advantage of EPOS services such as ANZ Royal’s “Blue Spot” whereby customers can pay for goods and services bills using credit and debit cards.
  • Mobile banking looks set to become a way of life.
  • This is a sector where Cambodia is ideally positioned to leapfrog the traditional prerequisite of an online banking stage, which is generally demonstrated in other emerging banking markets.
  • The solutions to enable mobile banking are ever more affordable and powerful. There are close to five million 3/4G mobile subscribers and 2.2 million active social media users, so in a few years mobile banking will be a common feature and no longer a differentiator.
  • Consumers bypassing this preliminary stage are quicker to expect mobile banking services from banks throughout the industry. This is especially so with a young and easily educated population.
  • The charges incurred when setting up and operating a business bank account in Cambodia vary depending on the bank, the type of account being opened and features offered.
  • Interest charges vary, with standard transactions being capped at 18%.
  • Each bank has a fee schedule outlining all charges, which is available to customers.
  • As well as set-up fees, there can also be costs to run the account depending on the type being opened and other various factors, such as whether it has an overdraft facility.
  • Some accounts also carry a fee for dropping below the minimum balance or for credit cards.
  • Overdraft facilities are available in Cambodia.
  • Commercial banks offer various solutions to their customers’ borrowing requirements, in the forms of overdrafts and business loans.
  • In the absence of a commercial credit rating system, access to credit is usually secured by land or fixed cash deposits.
  • Here a land title is used as security against a loan, the bank will generally lend up to 50 to 60 percent of the land’s assessed value (quick sale value).
  • If you want a $10,000 overdraft, you may need to set up a fixed deposit of the same amount, especially if you have no land to use as security.
  • Consequently, many small businesses face borrowing money from unlicensed lenders which is an expensive strategy.

Types of Banks in Cambodia

There are three types of banks in Cambodia – Specialized, Commercial and Micro Finance Institutions (MFIs). Here’s a quick overview of how these banks differ and how they might help you.

  • All banks, whether Specialized, Commercial or Micro Finance Institutions (MFIs), operate under the umbrella of the National Bank of Cambodia (NBC), which registers, licenses and regulates them.
  • The Ministry of Economy and Finance as well as the National Bank of Cambodia (NBC) regulate banks and banking services. The Association of Banks in Cambodia (ABC) represents the banking sector to the Royal Government of Cambodia and the ASEAN Bankers Association. The International Monetary Fund (IMF) and World Bank also operate in Cambodia. Banking is legislated primarily by the Law on Banking and Financial Institutions (LBFI).
  • The top four banks, which together have a combined market share of around 65% (based on loans outstanding), are ACLEDA, ANZ Royal, Cambodia Public Bank (CAMPU) and Canadia Bank, with the rest of the market shared between the other banks, of which there were 43 at the time of writing.
  • A Specialised bank, according to the Law of Banking and Financial Institutions (LBFI), carries out one of the following three activities:
  • 1) The collection of deposits from the public that are considered “non-earmarked”;
  • 2) Credit operations such as leasing, commitments and;
  • 3) Guarantees under signature, all of which are deemed valuable considerations.
  • Commercial banks in Cambodia offer a broader range of services, catering to the requirements of individual and corporate customers.
  • Local incorporated banks are required by the NBC and LBFI to have a minimum of $37.5m of capital or a shareholder with a rating of “investment grade” from an independent rating agency.
  • Commercial banks offer a wide range of services for individual and corporate customers.
  • To set up a bank account in Cambodia, make sure you bring the correct documents.
  • These vary but generally include a minimum of a copy of the applicant’s ID card or passport, proof of address and proof of income.
  • Corporate accounts require more documents, and will depend on the bank’s specific requirements.
  • Individual services include chequing and savings accounts and foreign exchange services.
  • Some also offer credit cards, overdraft facilities and personal loans.
  • Several banks now offer a payroll management service, saving customers time by allowing them to process payments directly to employees.
  • Online banking services are also improving in leaps and bounds.
  • Increasingly, multinational banks are encouraging wealthy Khmers to invest in more liquid financial assets, as opposed to investing solely in land.
  • While these markets continue to grow, continuing education is needed from banks and financial consultants to alter conservatism towards the international finance market.
  • As ASEAN takes form this year, more and more banks are attempting to offer region-wide services, allowing banking tools and funds to be accessible to business people across a number of ASEAN countries, if not all.
  • This drive is likewise ensuring banking codes of practice and ethics are being standardised across the region, benefiting Cambodian banking practice significantly.
  • There are over 40 MFIs in Cambodia.
  • MFIs service poor and low-income families, individuals and small institutions by providing micro-credit in the form of loans and other financial support.
  • Cambodian MFIs performed particularly well last year, delivering an average return on equity of 22 percent, making Cambodia’s MFI sector one of the best performing globally.
  • The sector has grown rapidly in recent years, with a 44% increase in loans in 2013. It grew from $1.3bn in 2013 to over $2bn in 2014, which is much faster than that of FDI, which grew from $1.3bn to 1.7bn in 2014.
  • The largest 8 MFIs use reliable credit assessment and risk mitigation tools (use of credit bureau, personal cash flow assessment, repayment ratios on disposable income and use of funds). However, smaller and unlicensed MFIs are not using them.

Money Matters

It’s all about the money! Here’s the head-ups on all you need to know about moving, managing and spending money in Cambodia.

  • Cambodia has its own currency (the riel) that comes in various denominations of paper bills ranging from 50 to 100000.
  • When the United Nations entered Cambodia in 1993 the economy became dollarized with the injection of a large amount of the US currency.
  • Restaurants, shops and hotels will generally accept larger bills.
  • Damaged or torn dollar bills are rarely accepted but can be exchanged at the local money changers for a small fee.
  • Cambodia still operates on a predominantly cash-based system.
  • However, credit and debit cards are now increasingly accepted at many hotels, restaurants and other retail outlets.
  • Card-based payments are still relatively uncommon but this is set to change quickly as the technological framework to support electronic payments is falling into place.
  • Cheques are used also, but sparingly.
  • Large transactions are generally conducted in dollars, with riel the equivalent of cents as there are no coins in use.
  • In rural areas, however, riel is still the dominant currency.
  • Many small shop owners and vendors will not take bills larger than $20 for small purchases.
  • Damaged or torn dollar bills are rarely accepted, and are sometimes impossible to pass on, but they should be able to be exchanged at the local money changers for a small fee.
  • An increasing number of Cambodians are switching from cash to cards as Visa and other international credit card companies continue to spread across the country.
  • The criteria varies from bank to bank, with some banks offering credit cards to clients whose income is as little as $200 per month.
  • Some banks require customers to load credit cards with money to spend, while some are yet to issue credit cards to the market mainly due to the low usage of credit cards in the country.
  • A few years ago, almost all cards were savings secured, now real credit cards are becoming more and more common.
  • Most commercial banks have ATMs, ACLEDA and ANZ Royal having the two largest networks with more than 685 ATMs collectively throughout the country as of the end of 2013.
  • Many ATMs also offer international access for withdrawals at a fee, which varies considerably so it’s wise to shop around.
  • ATMs offer additional services including mobile phone top ups and payment utility bills.
  • ACLEDA has the most branches of any bank in the country and concurrently has the largest number of ATMs, having established their network into the remote areas of the country.
  • Most commercial banks have ATMs in major centres and many offer increasingly wide rural coverage. Many ATMs also offer international access for withdrawals at a fee, which varies considerably so it’s wise to shop around. Some ATMs offer additional services including mobile phone top-ups and payment of utility bills. Note that different banks offer different levels of ATM service—if fast cash is important to you, and you work countrywide, you best choose a bank with wide ATM coverage.
  • The Foreign Exchange Law 2007 states money can be freely and reliably transferred in and out of the country through an authorized intermediary via a licensed bank.
  • Most banks can transfer money internationally, though funds over a certain amount may take longer to process and require central bank approval.
  • Transfers from overseas accounts transit through a correspondent bank in the USA so can take a couple of days, and the correspondent bank may charge a processing fee, as may the originating bank for incoming transfers, or the destination bank in the case of outgoing payments.
  • Western Union and MoneyGram services are available but are comparatively expensive.
  • For relatively small amounts, ATM withdrawals from an international account can be a cost-effective method of transferring money into Cambodia, especially if you choose an ATM service where the local bank makes no charge.
  • With the rise in use of smart phones across Cambodia comes with it a need for banking institutions to adapt to consumer needs.
  • This has led to a rapid rise in the use of mobile banking across the country.
  • Mobile payment services are now also operating in Cambodia, with WING being the leading electronic money transfer system – transfers are straightforward to make and cost just 6000 riel ($1.50) regardless of the amount transferred.
  • PayPal and Google checkout are not currently licensed to operate from Cambodia.
  • The cheque clearance system in Cambodia continues to develop.
  • Currently, it takes between two to four working days to clear a cheque in Phnom Penh and longer in the provinces.
  • Cheques made out in foreign currency can be deposited at banks, provided those banks offer accounts in that particular currency, for example; US dollars, Vietnamese dong or Thai Baht.
  • Bounced cheques are not particularly prevalent in Cambodia, due to banks being well educated about taking due care when receiving cheques from third parties.
  • Also, a bounced check can mean jail time for the writer.
  • In response to mounting concerns from the international business community that Cambodia is vulnerable to money laundering, the Government has tightened up its laws.
  • In March 2014, the Council of Ministers approved a sub-decree freezing assets of terrorist organisations and supporting institutions in compliance with UN resolutions.
  • In 2004, Cambodia joined the Asia/Pacific Group on Money Laundering, meaning the country must meet international standards to fight financial crime.
  • In 2007, a law on money laundering and terrorist financing was passed.
  • The next year, a Financial Intelligence Unit was established in the National Bank of Cambodia.
  • There is a lack of equity or bond markets in the country meaning alternative investment must be sought through alternative avenues.
  • Banks will only usually look to proven character, experience of repaying loans, and then cash flow, or profits from the business.
  • Most borrowers in Cambodia do not provide quality financial statements, thus they force the banks to lend with collateral, such as land, pushing most Cambodian SMEs out of the picture.
  • The microfinance sector provides funding to small companies, and is proving a successful utility for small businesses. The sector saw a 44 percent increase in loans in 2013.
  • Investors, business angels or venture capitalists are almost non-existent in Cambodia.
  • There are a few investment funds looking for mature projects, but for venture capital, there are only a few initiatives in the whole country.
  • There has been recent growth in private equity firms setting up in Cambodia, specifically targeting both foreign and local SMEs, but there still remains a gap in the middle of the market.
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1 COMMENT

  1. Are there any credit brokerage companies or agents? Are there any minimum down payment, maximum rate (if there is one), need for co-signer? What’s the maximum loan to income ratio, any limits that there may be? Please advise.