BANKING SYSTEM IN CAMBODIA

The article that you are going to read will provide you some general understanding of banking system in National Bank of Cambodia as a whole. They contain information about bank practices, industry environmental conditions, viewpoints, law and regulation in supervising banks and financial institutions. The National Bank of Cambodia-kingdom's central bank-has liberalized the financial markets as for the reform years ago. The system consists of foreign bank branches, local banks and NBC's provincial branches, which are now being privatized and the number will be cut down. Commercial banks have been given the rights in setting their own interest rates for deposits, which shall remain above the minimum rate determined by the NBC. Operating license has 3-year maturity, which bank shall have to renew for the next term operation. They are under the supervision by the central banks. We do not have investment banks or savings banks or community banking etc. yet. Today banking mainly serves business and investment sectors. The practices are flexible and adaptive to customers. Application of law is less severe in now context, so both local and foreign investors might find it easy and attractive in considering an investment. Loan, in most cases, is given based on the collateral. There must be house or land or building in exchange for the loan. Unlike other banking system where we can have inventory, accounts receivable, negotiable instruments or commercial papers as collateral pledged for loan, Cambodian banking situation does not allow that to happen yet. It is transparent that Cambodia is using cash as a dominant means of payment. Though check usage is common to some foreigners or companies or organizations, it would not appeal much to Cambodian merchants. They would prefer cash to check, as it is straightforward, fast and real. We do not have the retail payment system like payment at the terminal, payment via electronic machines or credit cards or any substitute means of cash yet. There is card for encashment and payment of bill but it is not widely and generally available as a form of payment either. The major obstruction for the national bank to implement a policy or a strategy is the fact that dollars are spreading over the country and they are outvalued than the national currency (Riel). Any better implementation of a plan or a regulation can occur as long as the NBC gets rid of dollar by which meant "dedollarization". This is a great burden, which the NBC and the government bear to do, and which may not by regulation but a creation of a trustworthy and beneficent condition.