As far as the topic of this paper is the analysis of the activities of the Acleda Bank, one of the greatest commercial banks in Cambodia, we should also take a look at the background at which this financial institution appeared and developed. The situation in Cambodia in the 1970s – 1980s was very controversial and difficult. The country was torn apart by a violent civil war that lasted for over a decade.
The regime of Pol Pot exterminated over 1, 5 million people from 13 million of population of Cambodia at that time. That regime was dismissed but the military conflicts in Cambodia lasted till 1991 when a peace treaty was signed. Only in 1993 the Government of Cambodia was internationally recognized and transnational organizations started giving help to the institutions of the newly formed country in Asia.
The help was mainly financial as the USA and some other highly-developed countries transferred money to Cambodia to assure the development of democracy in the country. One of the strategies that were planned to help develop Cambodia, was the development of microfinancial help to small enterprises all over the country, and namely for this purpose the Association of Cambodian Local Economic Development Agencies (ACLEDA) was formed in 1993.
The time of social chaos was both challenge and opportunity for financial institution. It was a challenge as it was hard for them to maintain in the society where civil war was just ended and no universal rule existed. At the same time, it was a great opportunity for them, because no competition existed and those who started their activity earlier got the chance to develop and become the leaders of microfinance in the country. Acleda was one of the first microfinance institutions in Cambodia and by 1994 it was self-financed for 50%. By the year 1995 the level of income of micro and small enterprises rose for over 45%, and specialists acknowledge the great role of Acleda in the process.
But with the course of time, Acleda developed and its assets allowed it to transform into a specialized bank. The funds demanded for it according to the Banking Law of Cambodia were borrowed from foreign investors who then took their shares in the company. But the activities of a specialized bank are limited to a certain area and the ambitions of Acleda made it transform into a commercial bank.
The share capital of the bank reached $13 million and Acleda was granted a status of the commercial bank in 2003. As for the reasons for the transformation, there are such as wish to develop and be the leader in the sphere of banking, purpose to increase the economic situation in the country and consequent benefit for the bank from it, and availability of the funds necessary to become a commercial bank and redundant for the narrow sphere of activities of a specialized bank or microfinance institution.
The internal policies of the bank are highly qualified and directed at the highest level of security for both clients and bank staff. All the employees of Acleda take up special study to get qualification needed to work in it, are forbidden to play cards, take gifts from customers. Employees go through hard testing and their relatives and even neighbors are interviewed before these people are employed. Credit officers also have to study to be competent in rural and urban crediting and be able to adjust to various conditions and clients with whom they will have to work.
On the whole, microfinancial institutions, to which Acleda belonged before becoming a bank, are profitable. They credit micro and small business, thus getting high levels of income as small businesses are the most numerous among other kinds of enterprises. Moreover, microfinance institutions develop the branch of business that is of crucial importance for every developing country.