General Supervisory Framework

In order to strengthen the banking system and protect public interests, the Banking Supervision Department supervises and monitors banking and financial institutions’ compliance with prudential regulations by reviewing financial statements to detect any illegal transactions. The sanctioning and/or de-licensing of banking and financial institutions occur when periodic financial statements reveal substantial risks. Usually, a warning is issued first.

Guiding Principle for Capital Market Supervision

The legal and regulatory framework for the financial sector consists of three core elements:

  • The Central Banking Law (1996) that gives the National Bank of Cambodia (NBC) the power to license, supervise, and regulate financial institutions.
  • The Banking Law (1999) that established the framework for the organization of banks and other financial institutions, and strengthened the NBC.
  • The Prakas (Regulation) Relating to the Implementation of the Law on Banking and Financial Institutions.

Laws related to banking and financial markets are currently in the legislative process. The priority is to establish a legal framework that ensures enforceability of financial contracts. This includes the completion of new laws or amendments to existing contract, corporate, bankruptcy, and investment laws. Also, supervisory regulations will be revised to ensure consistency with international standards.

A Capital Market Law has been drafted to create a Securities Exchange Commission that would establish a fully-operating capital market in conformity with the Investment Law and Banking Law.

In 2004, the Ministry of Economy and Finance (MEF) is expecting to adopt its draft Law on Government Securities and Law on Non-Government Securities Issuance and Trading. Implementation is expected to take place over the next few years. Issuance and trading of non-government securities and the establishment of an independent regulatory and supervisory agency will follow. The Non-Government Securities Law will facilitate the establishment of a securities market in Cambodia by 2007.

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