7/27/2019 Central Bank Halts New License-For Now

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Central Bank Halts New Licenses-ForNow By PHILIP HEIJMANS

THE CMlBODIA DAILY Despite receiving applicationsfrom banks looking to enter Cam-bodia's market, the central bankhas said it will offer no more commercial banking licenses as themarket already has enough players.The decision appears to followadvice offered by the InternationalMonetary Fund earlier this yearthat suggested a moratorium onnew licenses.The Il'v1F said that competitionwas already high enough in thesector, which now has 32 commercial banks and six specializedbanks."At the moment, we have a stricter policy on licensing new bankssince it is not in the interest of theeconomy to have new institutionsentering the banking sector at thistime," Nuon Sokha, director-general of the National Bank of

Cambodia (NBC), said yesterday.'There are entities that haveinterest in Cambodia as a destination, but the authorities so far have

not approved any applications nowand will not for the near future."The central bank's stance is instark contrast to its past position ofletting anyone enter the marketwith the necessary competence.Last year, Cambodia welcomedfour new banks, including Vietnam's Military Bank and Bank forInvestment and Development ofCambodia, Taiwan's Mega International Commercial Bank andthe Bank of ChinaIn February, the Il\1F's ArticleIV report stated that a moratoriumon bank licenses would give theNBC better supervisory controlover the oversaturated sector aswen as improve the overall healthof its banks."We have not totally closed thedoor to new banks.... We just needto consider the qualification criteria of banks and capacity of theeconomy to handle them as wellas what the market requires," Ms.Sokhasaid.Ms. Sokha added, however,that regulators had decided not to

take on board another Il'v1F suggestion to raise the reserve requirement of banks in order tooffset the threat of inflation.The reserve requirement forbanks, therefore, will stay at 12percentCambodia's inflation rate decreased to 3.7 percent in May thisyear, down from 4.8 percent themonth before, according to thelatest statistics of the National Institute ofStatistics.In Channy, CEO of AcledaBank, said the main need in thesector is for banks to improvetheir services.Many banks still do not have theability to transfer funds betweenother institutions in the countiy,for example."It is about the banks improvingtheir infrastructure, instead ofbringing in new banks that keepcoming in with the same productsthat all the banks have," he said.'The idea simply is to practicethose services offered in developed financial industries." .