Microfinance to dry up in Cambodia? Experts say a new interest rate cap could cause dozens of MFIs to fold

[geovalin]

Kali Kotoski and Hor Kimsay

 

Analysts say the central bank’s unprecedented decision to slash and cap microfinance interest rates at 18 percent a year, allegedly on the orders of Prime Minister Hun Sen himself, could bankrupt dozens of microfinance institutions (MFIs) while drying up credit channels to the poor – the very people the populist measure aims to help.

 

Ngeth Chou, senior consultant at Emerging Markets Consulting (EMC), projected that only the Kingdom’s largest microfinance providers would weather the sudden and drastic interest rate cut, which is slated to come into effect on April 1.

 

“In general, there would be a few like Prasac, Sathapana and HKL that may survive,” he said. “The rest will be unsustainable.”

 

read more http://www.phnompenhpost.com/business/microfinance-dry-experts-say-new-interest-rate-cap-could-cause-dozens-mfis-fold

 

 

-- © Copyright Phenom Pen Post 15/03

[12DrinkMore]

18% interest is already enough, how much do these userers want to extract from a small business?

 

Charge more than that and the microfinanced projects will struggle.