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#68, St 57, Boueng Keng Kang I, Chamkarmon, Phnom Penh * (855) 23 6373 168 * CONTACT@SITHISAK-LAWOFFICE.COM * Home * About us * Practice Areas * Our Team * Resources * Careers * Contact Us * * * * * Home * About us * Practice Areas * Our Team * Resources * Careers * Contact Us * * * * LEGAL AND TAX UPDATES 06 Jul LEGAL BRIEF: INTRODUCTION TO BANKING AND FINANCIAL INSTITUTIONS IN CAMBODIA Sithisak Law Office2023-07-06T09:53:07+00:00 By Sithisak Law Office Uncategorized Issue: No. 012P/23 – 6 June 2023 Banking and Financial Institutions are some of the most important stakeholders in providing finances for businesses in Cambodia. Based on the current legislations, the structure of banking system in Cambodia include commercial bank, specialized bank, deposit taking and non-deposit taking microfinance institution, rural credit institution, financial leasing company, credit bureau Cambodia, payment service provider, third party process, money changers, audit firms, and foreign bank representative office. Under the Law on Banking and Financial Institutions which was promulgated by the Royal Kram No. NS/RKM/1199/13 dated November 18, 1999, only licensed Bank and Financial Institution may operate its banking operations in Cambodia. The law defines the banking operation as (1) the provision of all types of credit to the public with a fee; (2) receiving of non-earmarked deposit from the public; and (3) processing and provision of payment methods in national or foreign currency. Under the Law on Organization and Functioning of the National Bank of Cambodia which was promulgated by Royal Kram No. NS/RKM/0196/27 dated February 01, 1996, the National Bank of Cambodia (NBC) is the central bank who has the authority, among other things, to issue license for and to supervise the Banking and Financial Institution who wishes to operate in Cambodia, and to issue prakas, circular, instruction, and other regulations to regulate the Banking and Financial Institution and the banking operations in Cambodia. TYPES OF BANK AND FINANCIAL INSTITUTIONS IN CAMBODIA According to the NBC, Banking and Financial Institutions are namely, commercial bank, specialized bank, microfinance institution (deposit-taking and non-deposit taking), rural credit institution, and others. Each of these banking and financial institutions is subject to specific licensing, prudential, accounting and reporting regulations, and other regulations as issued from time to time by NBC. Commercial Banks may operate all types of banking operations such as (1) the provision of all types of credit to the public with a fee; (2) receipt of non-earmarked deposit from the public; and (3) processing and provision of payment methods in national or foreign currency. Specialized Banks may operate only one out of the 3 main banking operations or any one component of each of such banking operations permitted for the Commercial Bank. Microfinance Institution may provide credit services to the public. In order a Microfinance can receive deposit from the public, it shall obtain a license of Deposit-Taking from the NBC. As provided by law, a Microfinance is restricted from providing financial leasing, dealing in derivatives, money changing, and gold, precious metals, raw materials and commodities, whether spot or forward, and from providing payment services through checking accounts or swap or forward dealings in foreign currencies. Please also note that other than the above banking operations, authorized banks and financial institutions may operate other services such as financial leasing and foreign exchange as provided under the Law on Financial Leasing and the Law on Foreign Exchange, respectively, by complying with the requirements and reporting obligations as provided under each respective law including the Law on Anti-Money Laundering and Combating the Financing of Terrorism. ESTABLISHMENT OF BANKING AND FINANCIAL INSTITUTIONS IN CAMBODIA Before issuing a license for the banking and financial institution to enable them to operate the banking operation in Cambodia, NBC will among other things consider on (1) quality and financial standing of the shareholders, (2) ability of influential shareholders in jointly complying with the obligations as required by the law, and (3) adequacy of their human, technical, and financial resources including the action plans of the banking and financial institution. In addition to these main requirements, all banking and financial institutions shall also comply with prudential regulations which include, but not limited to, the management of banking and financial institution, the maintaining of minimum paid-up registered capital, solvency ratio, capital guarantee deposit, reserve, liquidity coverage ratio and other requirement, etc. Each banking and financial institution are subject to different legal requirements, the detail of which will be detailed in our future publications. We hope that the above legal brief is helpful for your investment and help you to invest more confidently. Disclaimer The article is merely for general information purposes. It does not constitute a legal advice on the subject matter. If you have any question or need any assistance, please feel free to contact us: SON Sokeng, Partner, Managing Director sokeng.son@sithisak-lawoffice.com +855 12 885 870 He has more than 10 years of professional experiences in corporate, commercial, investment and capital market sector in Cambodia. He has leaded a legal counsel team to advise and assist Royal Railway Plc., Golden Tree Plc., one of the biggest commercial bank in Cambodia and one of the biggest telecommunication service provider in Cambodia in conducting legal due diligence and restructuring for their proposed bond issuance: plain, guaranteed and green bond issuance and listing; He also advised and assisted Phnom Penh Autonomous Port, Acleda Bank Plc., DBD Engineering Plc, one holding company in real estate sector and two other companies in their proposed listing at Cambodia Securities Exchange (CSX) through IPO. NOEUM Sokvichhai, Partner, Head of Corporate, Commercial and Investment Practice Group sokvichhai.noeum@sithisak-lawoffice.com +855 12 826 785 Sokvichhai has more than 6 years of experiences in labour, corporate, commercial and investment advisory in Cambodia. He actively advices and assists various businesses in commercial, tax, and labour registration, business licensing, products registration & distribution, business recapitalization & restructuring, and mergers & acquisitions transaction. He also has particular experiences in advising collective investment fund and trust business, investment incentives & qualified investment project, and labour & employment related issues. Read in PDF: RECENT NEWS Legal Alert: Instruction on the Implementation of Tax Incentives for Micro, Small and Medium Enterprises for the Development of Informal Economy May 31, 2024 Legal Update: Notification on the Adoption of Prakas No. 027 dated April 05th, 2024 on Requirements for Financial Soundness of Company Operating Collective Investment Scheme Business April 23, 2024 April 17, 2024 Legal Alert: Notification on the Obligation of Applying for Housing Development Business License, Co-owned Building Development Business License, Land Development Business License, Real Estate Service Business License, and Pawnshop and Transfer as Security Business License March 28, 2024 Legal Update: Prakas on Tax Incentives for Enterprises in Tourism Sector February 26, 2024 Legal Alert: Instruction on the Implementation of Tax Incentives for Micro, Small and Medium Enterprises for the Development of Informal Economy May 31, 2024 Legal Update: Notification on the Adoption of Prakas No. 027 dated April 05th, 2024 on Requirements for Financial Soundness of Company Operating Collective Investment Scheme Business April 23, 2024 April 17, 2024 Legal Alert: Notification on the Obligation of Applying for Housing Development Business License, Co-owned Building Development Business License, Land Development Business License, Real Estate Service Business License, and Pawnshop and Transfer as Security Business License March 28, 2024 Legal Update: Prakas on Tax Incentives for Enterprises in Tourism Sector February 26, 2024 Legal Alert: Instruction on the Implementation of Tax Incentives for Micro, Small and Medium Enterprises for the Development of Informal Economy May 31, 2024 Legal Update: Notification on the Adoption of Prakas No. 027 dated April 05th, 2024 on Requirements for Financial Soundness of Company Operating Collective Investment Scheme Business April 23, 2024 April 17, 2024 Legal Alert: Notification on the Obligation of Applying for Housing Development Business License, Co-owned Building Development Business License, Land Development Business License, Real Estate Service Business License, and Pawnshop and Transfer as Security Business License March 28, 2024 Legal Update: Prakas on Tax Incentives for Enterprises in Tourism Sector February 26, 2024 FILTER BY YEARS 2019 2020 Banking Environment Labor Real Estate Tax We are a full service general practice law office in the Kingdom of Cambodia, serving our clients’ needs since 2010. We have a well-established reputation as a major legal services provider in Cambodia with a clear vision for our clients’ success and growth, earning trust from both local and foreign businesses and investors, as well as private individuals who seek our tax. Read More LEGAL NOTICES * Disclaimers * Copy rights * Privacy ADDRESS * Address: #68, Street 57, Sangkat Boueng Keng Kang I, Khan Chamkarmon, Phnom Penh, Kingdom of Cambodia * Phone: (855) 23 6373 168 * Email: contact@sithisak-lawoffice.com ©2010-2023 SITHISAK LAW OFFICE. All Rights Reserved. FacebookLinkedinGoogle +TelegramWhatsApp