NBC calls on MFIs to spread risk

The National Bank of Cambodia was pushing microfinance institutions to look to domestic banks for funding in an industry heavily reliant on foreign loans, experts said yesterday. Although the NBC is seeking to foster healthier relationships between MFIs and the Kingdom’s commercial banks, a dearth of collateral among MFIs is hindering domestic borrowing. “We encourage direct links between MFIs and commercial banks because we want to stop MFI reliance on external sources,” Ngoun Sokha, director-general of the National Bank of Cambodia, said yesterday. “We want to avoid external exposure.” International borrowing increased the chances that financial turmoil in foreign markets, such as the sovereign-debt crises in Europe, would wreak domestic havoc, she added. A high level of liquidity in Cambodia’s commercial banking sector, along with lower interest rates compared to foreign loans, were also incentives for domestic borrowing, Nguon Sokha said…

http://www.phnompenhpost.com/index.php/2011090951563/Business/nbc-asks-mfis-to-diversify.html