Understanding the Foreclosure?

Recent IMF/World Bank reports on the financial banking sector in Cambodia reflected that some local commercial banks may face the increasing on the non-performing loans (NPL) during this economic slowdown amid the global financial crisis. The banks with large exposure to real estate sector, tourism sector and garment are now on the alert.
Only international standard banks are currently improving their risk management and are ready to prepare for any foreseeable events of writing off the bad debt, which drives to the foreclosure of borrowers’ collateral assets such as land, house building and other fixed assets etc…

According to National Bank of Cambodia (NBC)’s rules, any late loan repayment of more than 90 days is considered as NPL. More than 180 days, the loan will be written off.

The foreclosure often heard in the banking sector is occurred when the borrowers could not repay or has no more financial capacity to service the bank’s debt on time and the bank will use all its right to get it money back and sale the borrower’s collateral assets after obtaining the decision from the Court or the borrowers agree to sale it by themselves. Actually, the banks do not want it happened since it is complicated such as consuming lots of times with lawyers or the Court and high costs/fees on the borrowers’ side etc...