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RURAL CREDIT & SAVING (ADB)

The Rural Development Bank (RDB) shall make any credit or loan, or undertake to make any credit or loan, at the request or instruction of any agency or subdivision of Royal Government of Cambodia (the Borrower) or any person employed by the Borrower.

The RDB shall establish and maintain a Project Management Unit (PMU) to manage all aspects of the Project.

Licensed Financial Institutions (LFI) Accreditation; Re-Lending to LFIs

An LFI shall be required to meet the following criteria for initial accreditation and for continued participation in the Project:

(a)   Acquisition of an operating license from the National Bank of Cambodia (NBC);
(b)   Maintenance of full compliance with relevant NBC regulations, and reporting requirements applicable to the LFI in question;
(c)   Satisfaction of financial requirements for MFIs under NBC regulations, and, in the case of any other type of LFI, satisfaction of such financial requirements as shall be applicable to the LFI concerned under NBC regulations;
(d)   Achievement of savings mobilization level of at least 5.0 percent of its loan portfolio by the end of the third year of participation;
(e)   At least two years of experience in credit operations, and with an average loan recovery rate of more than 90 percent, and adequate staff strength and skills for the appraisal of loan applications from potential Sub-borrowers;
(f)     The development and submission to RDB of business plans for the duration of the Project setting forth comprehensive operational plans, including the locations of service outlets, numbers of potential Sub-borrowers, loan volume and financing plans for each year within a long-term plan;

LFI Loan Arrangements

RDB shall select LFIs and make decisions on disbursements to LFIs of LFI loans under the Project, subject to relevant NBC regulations and approved by ADB. RDB shall bear the financial risk of onlending to LFIs.
Sub-borrower and Subproject Eligibility Criteria 

RDB shall ensure that each LFI shall select Sub-borrowers on the basis of the business plan of the relevant LFI.

The Borrower and RDB shall ensure that LFIs shall charge interest rates to their Sub-borrowers sufficient at all times to recover all of an LFI’s operating expenses including administrative costs, loan losses and costs of funds.

RDB shall ensure that LFIs only finance Subprojects for the income generating activities of Sub-borrowers, which contribute to agriculture and rural development. RDB shall ensure that no Sub-loan made by any LFI shall exceed the equivalent of 10 percent of the net worth of such LFI.

Benefit Monitoring and Evaluation

Project Benefit Monitoring and Evaluation (BME) shall be carried out by the PMU in accordance with the guidelines specified in the ADB’s Handbook on Benefit Monitoring and Evaluation. The PMU shall establish a system for collecting and recording statistics required for such monitoring and evaluation as part of its Project management and implementation system. The PMU shall be responsible for overall BME.

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