FRIDAY, March 29, 2024
nationthailand

Thai banks offer joint loan to provider of microfinance in Cambodia

Thai banks offer joint loan to provider of microfinance in Cambodia

Three Thai banks - Siam Commercial Bank (SCB), TMB Bank (TMB) and Kiatnakin Bank (KKB) - together with Netherlands-based ING Bank have offered a syndicated loan of US$65 million (Bt2.2 billion) to PRASAC Microfinance Institution, the biggest microfinance

This is the first time a group of Thai banks have made a syndicated loan of this size to Cambodian borrowers.

The syndicated loan comprises $20 million each from KKP, SCB and TMB, and $5 million from ING Bank. The loan has two tranches, the first a three-year loan and the second a five-year loan.

International Finance Corporation (IFC), a member of the World Bank Group, arranged the syndicated loan. It sought the collaboration of Thai banks as it saw they had the ability to support financial institutions in neighbouring countries, said Adel Meer, IFC’s financial institutions group manager for East Asia and Pacific.

IFC earlier provided a loan of $10 million to PRASAC, while in Thailand IFC is a strong partner of TMB Bank through a long-term financing programme and loan guarantees to help Thai small and medium-sized enterprises.

IFC might arrange a baht-denominated syndicated loan to PRASAC to support its business expansion in the future, Meer said.

The demand for loans from micro and small businesses is high in Cambodia, where an estimated 40 per cent of the population lives on less than $2 a day. IFC aims to expand microfinance lending beyond the 845,000 borrowers that it currently serves through its support of four lenders in Cambodia.

Alexander Nondh Langfeldt, head of corporate banking of TMB Bank, said it would support a baht-denominated loan to PRASAC if asked to do so. Sim Senacheert, PRASAC president and chief executive officer, said this was a possibility because there is a lot of demand for baht in Cambodia’s border areas.

PRASAC is the largest microfinance lender in Cambodia and the fourth-largest overall in terms of loan portfolio, and it has submitted a proposal to the country’s central bank to be upgraded to a commercial bank. To prepare for that, it is restructuring its shareholding to comply with the relevant regulations.

Sim Senacheert said the $65-million syndicated loan would support its loan-growth target of 40-50 per cent per annum. The long-term funding will enable PRASAC to extend more loans to small businesses and low-to-middle-income borrowers, 85 per cent of whom are women.

PRASAC has a total loan portfolio of $700 million, which it targets increasing to $900 million by the end of 2019.

The maximum credit line for a micro borrower is $1,800.

nationthailand