In the meeting, representatives and experts said that around 0.6 percent of borrowers from the Cambodia Microfinance Association (CMA) are unable to pay their loans. Although this represents a small percentage, late payments are on the rise.
Bun Mony, director of MCA, was quoted by the Cambodia Daily as saying that “most of my borrowers pay off their debts regularly, less than 1 percent has trouble with their payments.”
Payments are made by using the loan from one micro-lender to pay the next micro-lender till they no longer can have access to micro-loans from the MFIs. Over 1 million Cambodians have borrowed from over 100 organizations with over $440 million in outstanding micro-loans.
During the Global financial crisis, Cambodian farmers have hard time to repay loans on times. As a result, those will be faced with the confiscation of their properties such as farmland, and houses. Although, MFIs claim that they don’t seize properties for late payments, they are indeed part of the chain that pushes the poor off of their land.
It is expected that the late payment will be continuing to increase up to 1 or 2 percent.
Chan March, general manager of Credit Microfinance Institute, sad that his company has so far taken two clients to court because of late payments-one in Kompong Cham province and one in Kompong Chhnang- but in both cases, payments were made before a court-imposed deadline, and no land seizures were necessary. A third case, also in Kompong Cham, is currently before the court, reported the Cambodia Daily.
More than 20,000 borrowers, the majority of whom are women and are among the rural poor.