IDLO Microfinance Policy and Regulation Survey: Cambodia

This paper provides an overview of Cambodian microfinance, and traces the evolution of microfinance regulation in the country.

Microfinance evolved from a series of small, isolated projects into a sophisticated segment within the Cambodian financial services sector. Key highlights of the evolution include:

• National Bank of Cambodia (NBC) set up the Supervision Office of Decentralized Banking System Bureau in 1997;
• Government created the Rural Development Bank to promote rural finance in 1998;
• Cambodian Government adopted a two-tier system for supervising microfinance in 1999;
• Supervision Office was split into MFIs Supervision Office and Project of Support to the Microfinance Sector in 2000;
• Issuance of new prakas (implementing decrees) marked a move towards commercialization of microfinance and its integration into the formal financial system in 2000;
• NBC issued and revised regulations that transform NGOs into registered and licensed MFIs in 2000;
• Cambodian government and the Asian Development Bank worked together to develop a long-term strategy for financial sector development in 1999-2000.

According to reports in 2008, Cambodian regulators are planning the country’s first credit bureau, and hope that such market infrastructure will protect the sector from runaway debt.