In Cambodia, there’s been a noticeable uptick in savings held in deposit-taking microfinance institutions (MFIs). In 2023, the combined deposit balance in four key MFIs – AMK Plc, Amret Plc, LOLC (Cambodia) Plc, and Mohanokor Plc – reached $2.22 billion. This marks a significant 11 percent rise from the previous year’s $2 billion, according to the Cambodia Microfinance Association (CMA). Notably, figures for Prasac Bank were excluded since it transitioned from an MFI to a commercial bank.
This growth in deposits is widely viewed as a sign of the public’s growing confidence in these financial institutions. Kaing Tongngy, CMA’s Head of Communication, attributed the increase to the robust nature of the sector and the confidence it inspires among the public. The integration of technology into banking services has also played a crucial role in this positive trend. Initiatives like Bakong and CamDigiKey, supported by the government, have streamlined the processes of onboarding and making payments for customers.
Sok Sophal, the Deputy Chief Executive Officer and Chief Finance Officer of LOLC (Cambodia) Plc, highlighted the adoption of digital banking innovations that facilitate services like QR payments, interbank money transfers, and other mobile app-based services. AMK MFI, in particular, has developed a proprietary app aimed at enabling rural customers, including farmers and laborers, to manage loans and deposits remotely. This digital approach not only enhances convenience but also improves the efficiency of field agents responsible for collections through training in electronic Know Your Customer (e-KYC) procedures and digital documentation.
However, the rise in the number of depositors in 2023 was modest, with a 1 percent increase to 2 million, up from 1.98 million the previous year. Despite the slow growth in depositor numbers, the average deposit value saw a 10 percent increase to $1,106, up from $1,009 in 2022. This disparity suggests a deepening relationship between MFIs and their existing clientele, with many opting to increase their deposits.
The attractiveness of MFIs has also been buoyed by competitive interest rates. Data from the National Bank of Cambodia reveals that the interest rate on deposits at MFIs was 8.4 percent in 2023, a significant increase from 7.4 percent the year before. This enhanced return on savings is likely a key factor driving the growth in deposit balances, underscoring the role of MFIs in providing valuable financial services to Cambodians.
