The National Bank of Cambodia (NBC) has announced the enforcement of regulations on capital buffer and on credit risk for capital adequacy ratios (CAR) for banks and deposit-taking microfinance institutions (MFIs). These measures aim to bolster the management of diverse risks, it said.

In its June 29 press release, the NBC revealed that these regulations, referred to as prakas, form part of the solvency measures for banks and deposit-taking MFIs.

“These two prakas were drafted to international standards, considering the context, development and future vision of Cambodia's banking and financial systems, along with pertinent legal and regulatory elements in force,” it said.

The prakas aim to bolster the capital and resilience of banks and deposit-taking MFIs in mitigating various risks, including credit and operational risks, and market volatility. This is to safeguard depositors and investors, uphold business stability and protect the overall banking system.

The regulations reflect NBC's commitment to shaping the future development of financial markets, setting the terms and conditions for recognising financial instruments of tier one and tier two capital in advance.

The adherence to international norms outlined in these prakas will enhance the standing of the Cambodian banking system, and foster confidence among investors and lenders, particularly those based overseas.

The NBC's statement also highlighted its support for agriculture, education and the welfare of the populace, by easing an 85 per cent risk-weighing on reasonably sized loans provided to individuals, and supporting housing purchases through credit risk-weighing alleviation.