Cambodian Banking Leader Estimates $20M Credit Impact From Border Conflict Loan Relief

PHNOM PENH, Aug 27, 2025 — Cambodia’s banking sector has absorbed an estimated $20 million in credit impact due to loan relief measures extended to frontline soldiers and displaced families affected by the ongoing border conflict with Thailand, according to Toch Chaochek, CEO of Cambodia Post Bank and board member of the Association of Banks in Cambodia (ABC).

Speaking on Aug. 26, Chaochek said the figure reflects deferred interest and grace periods granted to borrowers in conflict-affected zones, particularly in Preah Vihear and Oddar Meanchey provinces. He noted that while the financial impact is significant, it has not disrupted the sector’s overall growth trajectory.

“Initially, banks offered a three-month interest waiver for frontline soldiers, but that has now been extended to six months,” Chaochek said. “We previously assumed the number of affected borrowers would be small, but recent data shows nearly half of the soldiers in these provinces are directly impacted.”

He added that  Banking sector has seen a $20 million effect on its credit balance, but emphasized that the impact is manageable when spread across the six-month relief period. “It’s a substantial figure, but not one that threatens the bank’s stability,” he said.

Chaochek warned, however, that prolonged instability could affect credit quality and economic growth, especially in border provinces where his bank operates more than 10 branches. He said other banks are facing similar challenges, and that lending activity has slowed due to limited business opportunities for residents in conflict zones.

“If the situation resolves quickly, the impact will be minimal,” he said. “But if it drags on, the consequences will deepen.”

The remarks follow a July 30 directive from the National Bank of Cambodia urging financial institutions to ease loan burdens for military personnel, displaced families and migrant workers returning from Thailand. The directive allows for loan forgiveness of up to 10 million riel for disabled soldiers and up to 80 million riel for frontline borrowers and co-borrowers.

Under the policy, banks and financial institutions must waive interest and penalties for six months, from July 30, 2025, to Jan. 31, 2026, and suspend principal repayments for eligible borrowers. Institutions are also prohibited from capitalizing interest during the relief period.