Thursday, February 4, 2010

Banking Modernization and Microfinance Industry

BY BUTH REAKSMEY KONGKEA

The National Bank of Cambodia (NBC), in collaboration with the National Information Communications Technology Development Authority of Cambodia (NiDA) and International Data Group (IDG ASEAN), and Cambodia Microfinance Association (CMA), have conducted a “Modernization of Bank and Microfinance Industry Conference” for two days from January 26-27 in Phnom Penh, aiming to introduce the use of a new banking system and microfinance services in Cambodia.

About 1,000 people who are banking authorities, solution providers, technology experts and bankers from ten countries in the world attended the banking conference in Phnom Penh.

Dr. Phu Leewood, NiDA’s Secretary General, said that it marked the second time NiDA, NBC, IGD ASEAN, and CMA have conducted this “Modernization of Bank and Microfinance Industry Conference” in Cambodia. He added that this year’s event is organized with the theme “Gaining a decisive edge in banking and payment solution in Cambodia”.

He continued to say that conference aimed to promote sustainable development through innovative customer solutions, improved operational efficiency and advanced risk management. It will also serve as an ideal perform in making a perfect tool for all players in the banking and financial sector of Cambodia to conduct an exchange of opinions and experience.

Tal Nay Im, Director General of the National Bank of Cambodia, said that Cambodia’s financial sector is not directly affected by the global financial crisis given that there is no capital market and the local financial market remains underdevelopment and is not integrated into the world or regional markets.

The Director-General Nay Im continued to say that however, Cambodia’s financial sector is moderately vulnerable because of its exposure to the real sectors. So far, NBC had undertaken substantive actions in response to the emerging strains on the banking system.

Currently, Cambodia’s banking system is in a good shape, comprising of NBC that acts as central bank of the country, 27 commercial banks, two foreign banks representative offices, six specialized banks, 20 licensed microfinance institutions and 26 registered microfinance operators which are under the regulatory and supervisory authority of NBC.

“Most of the recent performance indicators suggest that the banking system is reasonably profitable, efficient, has adequate liquidity, and is well capitalized. On overage banks have maintained overall solvency at above 25 percent (33.5 percent in November 2009) compared to the minimum prudential requirement of 15 percent. All these achievements prove that our banking system is getting stronger and receives more confidences from the public. Furthermore, new system is entrants in the financial sector from foreign investors confirm the potentials of the Cambodia’s financial system, in particular the effectiveness of the issuance and the implementation of the law, prudential regulations under the tight supervision from the supervisory authority,” she told reporters during a press conference on January 26.

The Director General emphasized that to enhance and build an effective and progressive banking and finance business environment, modernization banking service by using Information and Communication Technologies (ICT) are of necessary in Cambodia. She said with a computerized and modernized banking system, NBC is in the process of modernizing the Core Banking System for the bank, and would be officially launched in February.

She added that the National Payment System is also being developed in order to enhance the settlement and payment transaction of the banks more effectively, safe and fast. This system would tremendously reduce the cash-based settlement and payment transactions. Banks and financial institutions are also using ICT applications to improve the quality of their services to be more transparency, reliable and faster to respond to their customers’ need.

“I believe that Banking Cambodia 2010 is an essential channel for all banks and financial institutions to discuss and update themselves with the latest trends and solutions that would help bankers to better response to the challenging market environment,” she said. “It would also be an ideal networking platform for local and regional banking authorities, solution providers, technology experts and bankers to meet up and exchange ideas and tap fresh opportunities.”

According to a report of NBC, the figures showed that at the end of 2008, Cambodia’ s commercial banks had US$2.52 billion in deposits and US$2.38 billion in loan disbursement. Net profit across the sector was US$116.6 million. Today’s 27 commercial banks, as of the late December 2009, have attracted more 800,000 depositors, representing six percent of its population, exchanging the deposits in the microfinance system.

The financial sector has grown not only quantitatively but also qualitatively as reflected in remarkable diversification of the financial products and increased public accessibility. Significantly, at the end of the year 2009, microfinance services reached more than one million families, accounting for nearly 40 percent of the population using the services of microfinance institutions in Cambodia.

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