Since its inception in the 1990s, the Cambodia microfinance industry shows a rapid growth in the last decade Microfinance, which was initiated as an NGO credit project, now has become both legal and commercial.

Sixteen licensed Microfinance institutions provide credit and savings to both urban and rural poor people through individual and group lending. There has been a switch in loan focus over the last two years, as many MFIs specialized in group loan methodologies. However, some of them have moved from group to individual loans and vice versa. Moreover, some of them have made a jump to other areas of finance which has made the market increasingly competitive.

To catch up to the demand in this market, some institutions have been trying to revise their current product in terms of repayment method and pricing (especially on loans in Khmer Riel). Consequently, the interest rate for loans in Khmer Riel has slightly decreased over the past two years (from roughly 4% to around 3% per month).

Nevertheless, the whole microfinance industry shows growth from US$ 33.94 millions in the first quarter of 2005 to US$ 54.93 millions in first quarter of 2006, and US$ 71.66 million in the third quarter (while maintaining an 11% quarterly growth rate on average).
 

Registered MFIs have provided around 86 million dollars in credit to borrowers in Cambodia, which is considered to be an insufficient amount for the market demand. Additionally, there has been a increase in the number of borrowers. Specifically the number of borrowers increased from 353,435 in 2005 to around 449,458 in the fourth quarter of 2006.
 

Since there is still a sizable market remaining, each MFI has put its focus on both market penetration and expansion. Thus additional funds will be needed to support and strengthen the business growth and allow for greater market penetration.
 

Because the commercial banks in Cambodia could not provide loans to microfinance institutions in the past, this necessitated that Hattha Kaksekar had to seek funds overseas. Consequently, overseas sources of funds (in terms of loan and equity investment) will play a key role in sustaining the growth of each Hattha Kaksekar when savings product is not active.