PHNOM PENH – Informal loans are easy to get but cause repayment problems which lead to uncontrollable debts, National Bank of Cambodia (NBC) governor Chea Serey has warned. 

She urged people to avoid all types of informal loan due to high interest rates and the lack of legal protection. 

Informal loans are provided by any individual or company without a license from the NBC. Such loans are advertised on online platforms like Facebook, TikTok, or Telegram and through posters at public sites. 

The interest rate may be or more than 40 percent, and borrowers might get unreasonable punishment for late repayments, according to the governor. 

“Please be careful of informal loans,” Serey warned on Oct. 8. “If it seems too easy or too convenient, please reconsider the decision. People who need loans should borrow from licensed banks or microfinances.” 

Otherwise, the borrowers can’t be protected if there is a problem with their repayments because the lenders tend to hide their identities and locations. 

Vigilance must be increased especially when the economy has been tight lately, Serey added.

The governor expressed her concerns, particularly for people who want to take loans, yet cannot borrow from formal institutions and choose informal lenders instead. 

“Formal institutions don’t approve the loans because they are aware that you won’t be able to pay them back,” she said. 

“It’s better not to take the loans. You can borrow from people you know, but don’t borrow from those who you don’t even know their faces and give your thumb print for loan documents at any cafe or other places. It’s not trustworthy.” 

Licensed banks and institutions don’t require national ID, ID-poor card, children’s birth certificate, or family book to secure the loans, as the NBC prohibits such condition for borrowers. 

Serey also warned the public about investments through social media that promise to make excessive profits. 

Cambodia has 59 commercial banks, nine specialized banks, four microfinance deposit-taking institutions, 82 microfinance non deposit-taking institutions, 115 rural credit institutions, 16 financial leasing companies, six third-party processors, 33 payment service providers, one credit information sharing service provider, five representative offices of foreign banks, and 3,350 currency exchange businesses.