ធន គ រជ ត ន កម ព ជ NATIONAL BANK OF CAMBODIA

Transcription

1 1 ធន គ រជ ត ន កម ព ជ NATIONAL BANK OF CAMBODIA

2 Financial Inclusion in Cambodia: Issues and Challenges December 7-8, 2017 Presented by: Khou Vouthy (Ph.D.) Deputy Director General The views expressed in this presentation are those of the author and do not necessarily represent the views of the NBC. 2

3 Outline - Financial Depth - Financial Inclusion - Constraints and Challenges - Measures to Address Constraints and Challenges - Policy Implications 3

4 Financial Depth Cambodia has experienced rapid financial deepening in the last decade. 4

5 Financial Depth As a share of GDP, credit to private sector has tripled, while deposits has doubled since Credit to Private Sector ( est.) Deposit of Banking System ( est.) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 27% 7% 90% 17% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 43% 35% 84% 22% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Credit to GDP Groth (RHS) Deposit to GDP Growth (RHS) Source: 5

6 Financial Depth The degree of monetization in the economy (M2/GDP) has almost tripled during the last decade. 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 28% Broad Money (M2)/GDP 79% est. Source: 6

7 Financial Depth Cambodia s financial depth is relatively high given its income level. 7

8 Financial Inclusion Cambodia s financial sector has grown rapidly, especially providing opportunities to people in the rural area and to those with low income. 8

9 Financial Inclusion Across Countries Cambodia s formal financial inclusion ranks higher than Laos, Myanmar and Pakistan, particularly because of other formal sector (Microfinance). Source: FinScope Cambodia Consumer Survey, Topline Findings, July

10 Financial Inclusion: Demand Side Total number of depositors and borrowers has increased sharply during the last decade Number of Depositors ( est.) In million Number of Borrowers ( est.) In million Banks' Depositors MDIs and MFIs Depositors Source: 10 Banks' Borrowers MDIs and MFIs Borrowers

11 Financial Inclusion: Demand Side The share of depositors and borrowers has also increased significantly. There is a shift in the share of borrowers with depositors. Depositors/Adults Population Borrowers/Adults Population 35% 30% 25% 20% 15% 10% 5% 0% 8% 2% 30% 16% est. 25% 20% 15% 10% 5% 0% 9% 3% est. 18% 7% Banks MDIs and MFIs Banks MDIs and MFIs Source: 11

12 Financial Inclusion: Supply Side Branches of MFIs and payment service agents have broadened their reach to rural people, who used to be non-banked. Banks, MFIs and MDIs Branches and Number of In thousands Source: Banks' Branches Number of agents MFIs' Branches (Right) 12

13 Financial Inclusion: Supply Side Banks and MFIs have invested a lot in technology infrastructures leading to a rapid increase in the number of ATMs, POS, Debit and Credits cards. 2,000 1,800 1,600 1,400 1,200 1, ,295 Number of ATM and POS ATM increased by 4.5 times POS increased by 5.2 times 1,754 14,985 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - In million Number of Debit and Credit Cards D Cards increased by 2 times C Cards increased by 4.1 times est In thousand ATMs POS(Right) Debit Cards Credit Cards(RHS) Source: 13

14 Financial Inclusion: Supply Side The geographical density of financial infrastructure has increased significantly to reach nearly one MFI branch per square kilometer Geographic Penetration of Banks and Financial Institutions Branches and ATM ( ) B. Branches per 1000 km2 increased by 2 times M. Branches per 1000 km2 increased by 4.5 times ATM per 1000 km2 increased 3.5 times Source: B. Branches per 1000Km2 ATM per 1000 km2 M. Branches per 1000Km2 (Right) 14

15 Financial Inclusion: Supply Side The demographic access to financial infrastructure has increased 4 times Geographic Penetration of Banks and Financial Institutions Branches and ATMs ( ) B. Branches per 100k adults increased by 2 times M. Branches per 100k adults increased by 3.8 times ATM per 100k adults increased 3 times B. Branches per 100,000 adults ATMs per 100,000 adults M. Branches per 100,000 adults (Right) Source: 15

16 Development of Cambodia s Microfinance Early 1990s: NGOs delivered credit to rural poor and micro entrepreneurs in integrated rural development programs. Share of MFIs credit to GDP has increased significantly, 6 times, since % 15% 10% 5% 0% MFIs Credit to Private Sector 18% 3% est. Credit to GDP Credit Growth (RHS) 80% 70% 60% 50% 40% 30% 20% 10% 0% 16

17 How Has Microfinance Sector Been Developing and Contribute to Financial Inclusion? 1999: Law on banks and Financial Institutions was adopted Early 2000s: microfinance operators transformed into commercial nature and regulated by NBC (NBC). MFIs have been categorized into 4 types: Non-registered NGOs Rural Credit Institutions Licensed MFIs Microfinance Deposit-Taking Institutions 17

18 Prudential Regulations on FIs 18

19 Women Role in Microfinance Sector Share of MFIs' Borrowers As of Sept ,000 1,800 1,600 1,400 1,200 1, Men Women 1, Women 78% Men 22% est. Source: 19

20 Financial Inclusion : Mobile Service in Cambodia Branchless banking and mobile banking play very important roles in extending financial access to people living in the rural area. Mobile money accounts (Thousands) Registered Active Mobile cellular subscriptions (Per 100 people) ASEAN range Cambodia Sources: Financial Access Survey. Sources: World Development Indicators 20

21 New Financial Access Indicators Cross Country In terms of number of mobile accounts as a percentage of the population and among respective group, Cambodia ranks highest among low and middle income countries in the region. Mobile account, 2014 (In percent of population age 15+) Mobile account, 2014 (In percent of respective population group) Primary education or less Secondary education or more KHM MMR IDN VNM THA MYS PHL SGP Low & middle Sources: Findex income 0 KHM VNM THA PHL Low & middle Sources: Findex income 21

22 Financial Inclusion, Poverty Reduction and GDP per capita While the rate of adults given access to financial service has increased, poverty in Cambodia has declined noticeable. 60% 50% 40% 30% 20% 10% 0% % 17% Financial Inclusion and Poverty Rate and Per Capita ( est ) 56% est. Financial Inclusion Poverty Rate Per Capita GDP(RHS) 11%

23 Constraints and challenges to Promoting Financial Inclusion Though, financial inclusion in Cambodia has been improved, some barriers and challenges still remain that inhibits its progress. 23

24 Major Constraints Demand Side Supply Side transaction cost and complexity of financial service processing limitation of product and services tyranny of collateral financial literacy socio-cultural issue transaction cost default risk collateral issue information matter contract enforcement etc. 24

25 Financial Inclusion Vs Financial Stability The objective of the microfinance institutions operation is to enable the SME and the rural poor to access to finance to start up their business or support their daily living. However, the nature of the operation of the microfinance institutions may face some risks, including: - Currency mismatch: source of funds in USD but use of funds are small and in local currency (Riel) - Reliance on external source of funding makes the sector more vulnerable to external shocks and the uncertainty of the source of funds. 25

26 Financial Inclusion Vs Financial Stability - Increasing of the degree of dollarization if those microfinance institutions avoid the risk of currency mismatch by providing loan in US dollars - Rapid credit growth in this sector may lead to a crisis due to declining asset quality should the process of expanding the access to finance to the rural poor done inappropriately - The process of expanding the access to finance demands more management and leadership from the microfinance institutions which sometimes outsourced to the external institutions. This will give rise to governance and/or reputational risks for the parent institutions and - Make access to finance broader means more agents and intermediaries involved in the sector, imposing more regulatory burdens and increasing the regulatory risk. 26

27 Financial Inclusion Vs Financial Stability How to balance between Financial Inclusion and Financial Stability? 27

28 Measures to Address Constraints and Challenges to Financial Inclusion 28

29 Measures to deal with the constraints and challenges to FI - Enhance supervision and regulatory framework Risks based and forward looking supervision Update and introduce regulations according to market development: Introduce macro and micro prudential measures - Enhance financial stability monitoring Financial stability Committee within the NBC was established in 2011 Assess risks both from macroeconomics and financial sector Conduct stress-test on liquidity and capital adequacy 29

30 Measure to deal with the constraints and challenges to FI - Promote financial literacy Conduct campaign Let s Talk Money Cooperate with Ministry of Education, Youth and Sport to introduce financial education in the general education program Conduct seminars in provinces and districts about microfinance and financial culture. - Improve credit information sharing mechanism Consumer credit reports Extending to commercial credit reports - Develop consumer protection scheme 30

31 Measures to deal with the constraints and challenges to FI - Set up a Hotline number to respond and deal directly with the public - Develop electronic payment system - Encourage banks and financial institutions to provide FinTech services to reduce participation and financial intermediation costs - Improve collateral frameworks, Ex. Introduce micro insurance on loan, or saving history. - Improve data collection (such as FSI, real restate) and collaborate closely with government agencies - Preparing strategy on financial inclusion 31

32 Policy Implications 32

33 Policy Implications Should we further promote FI? What are some effective policies to promote successful and sustainable FI? How can Cambodia take advantages of having a high percentage of mobile account registration to promote financial inclusion? How to balance financial stability while allowing further financial inclusion? What set of policies will advance further financial inclusion while mitigate its potential negative effects on financial stability? 33

34 Thank You! 34