Banks, microfinance institutions in Cambodia required to raise minimum capital

The National Bank of Cambodia (NBC), or central bank, has ordered banks and microfinance institutions in the country to increase their minimum capital requirements by March 2018.

According to a Prakas (edict) seen by Xinhua on Friday, commercial bank locally incorporated as local company or foreign subsidiary will be required to have a minimum registered capital of 75 million U.S. dollars, up from the current 37.5 million U.S. dollars.

The edict added that commercial bank incorporated as foreign branch, whose parent bank is rated "investment grade," will have a minimum registered capital of 50 million U.S. dollars, up from 12.5 million U.S. dollars now.

Specialized banks will be required to raise a minimum capital of 15 million U.S. dollars from the current 7.5 million U.S. dollars, it said.

Deposit-taking microfinance institutions will be required to increase their minimum reserves to 30 million U.S. dollars, up from 2.5 million U.S. dollars now, while microfinance institutions, which do not offer deposit-taking service, will have to increase their reserves to 1.5 million U.S. dollars, up from 62,500 U.S. dollars now.

"The objective of this Prakas is to strengthen the capital base of banking and financial institutions," it said, adding that all banks and financial institutions will have two years to raise their minimum capital requirements.

It will be the third time since 1999 that the NBC has told banks and microfinance institutions to increase their minimum capital.

According to the NBC, Cambodia had 36 commercial banks, 11 specialized banks and 58 microfinance institutions with seven of them taking deposits. Endit