Rural families across Cambodia are handing over land deeds to microfinance lenders at a pace that has now drawn the attention of the National Assembly. Parliamentary hearings opened Monday in Phnom Penh. At issue is whether 30 licensed microcredit institutions and seven commercial banks broke the law.
The hearings trace back to a simple, brutal number: more than 200,000 borrowers have defaulted in the past twelve months. Dozens of land titles have already been transferred through foreclosure. Lawmakers want to know if interest-rate caps, collateral rules, and consumer-protection laws passed in 2022 were ever actually enforced.
The National Bank of Cambodia recorded a 38 percent jump in non-performing loans between July 2024 and June 2025. That surge triggered this inquiry. The central bank had already tightened rules in March of this year, capping effective interest at 18 percent and requiring lenders to verify disposable income. But lawmakers say enforcement was patchy at best.
Yim Sovann chairs the National Assembly’s Banking and Finance Commission. He told reporters the committee has received 1,700 written complaints and 300 witnesses willing to testify. “The committee will determine whether aggressive sales tactics and hidden fees pushed borrowers beyond statutory debt-to-income limits,” Sovann said.
Internal loan files, marketing scripts, and foreclosure records from the country’s largest microlenders are now under review. Those lenders include Prasac, Amret, and Acleda Bank’s microfinance arm.
The numbers paint a stark picture. According to NBC data, the average microloan in Cambodia reached $4,140 this year. That is the highest in Southeast Asia relative to per-capita income. Rural households now spend an estimated 42 percent of monthly earnings on micro-debt payments. Five years ago that figure was 28 percent.
Outside the hearing hall, farmers from Kampong Speu and Battambang provinces gathered. They described a spiral familiar to many across the countryside: take a small loan to buy fertilizer or cover a medical bill, then take another to pay off the first, then lose the land when the payments become impossible. The hearing is scheduled to examine whether those spirals were engineered by lenders using hidden fees and aggressive sales tactics.
Cambodia’s microfinance industry is worth $17 billion. It has long been held up as a development success story — a way to extend credit to people banks would not touch. But the past twelve months have tested that narrative. More than 200,000 defaults is not a blip. It is a systemic failure, or a systemic exploitation, depending on who you ask.
The parliamentary committee has subpoenaed loan files and marketing scripts. It will also review foreclosure records. The question is not whether borrowers borrowed too much. The question is whether lenders lent too much, knowing the borrowers could not pay, and then took their land when the scheme collapsed.
The hearings are expected to run for several weeks. The central bank’s own data will be central to the case. The 38 percent jump in non-performing loans is hard to explain away. So is the fact that rural households now devote nearly half their income to debt service.
Lawmakers have the documents. They have the witnesses. What they do with them will determine whether Cambodia’s microfinance sector faces real reform or simply another round of promises.
