Cambodia is a bank-based economy. Commercial banks are the primary source of funding. The Cambodian banking system is a two-tier system comprising the Central Bank (National Bank of Cambodia), and private sectors such as commercial banks, specialized banks, microfinance institutions, and a number of NGOs involved in rural credit activities.
The key players in Cambodia’s banking sector are NBC, 31 commercial banks of which 22 are local incorporated banks and 9 foreign bank branches, 7 specialized banks including one state bank, 2 Representative office of foreign commercial banks, 32 microfinance institutions where 7 are eligible to collect customer deposits, and 29 NGOs involved in rural credit activities. By December 2011, the banks currently operated the total amount of loan reaching US$ 4.07 billion with 294,533 borrowers and 1,266,412 depositors. In addition, MFIs loaned US$ 644 million to 1,141,913 borrowers, with deposit collections of US$ 116 million from 242,116 depositors.
Recent liberal investment regime and open market trade policies have gathered momentum for Cambodia's economic prospects and banks are also enjoying benefits from such strong growth opportunities. The Cambodian banking sector has been improved recently; yet; it still lacks of financial depth and is being fragmented. To gain more international confidence, significant progresses are necessitated to address structural distortions such as inadequate legal framework for secured transactions, and information asymmetry arising from poor disclosure standards. The amended Law on Banking and Financial Institutions made it necessary for all of Cambodia’s commercial banks to reapply for licenses and the NBC has raised the minimum capital requirement for commercial banks to US$ 37.5 million, specialized banks to US$ 7.5 million, microfinance deposit-taking institutions (MDI) to US$ 2.5 million, and licensed MFI to US$ 62,500.