ABSTRACT

Microfinance is a main source of capital for small loan borrower which the role of bank disappears for such loan. However, the loan provided by microfinance contains both negative and positive consequences for rural development. With easy-getting loan, borrow do not hesitate to borrow loan with care about their income which cause high saturation. In order to reduce loan saturation and ability of paying back loan, an interest ceiling is set by the Royal Government of Cambodia. So, our research aims to find whether the interest ceiling can be applied or not, and the effect on financing to rural business. Aftermath, a present of additional fee for loan process was charged to the borrow. However, this interest ceiling cannot be applied without the fee. The use of loan plays important role for the borrower to pay back. Without business guideline and with encouragement from the credit officer, people borrow the loan from finance to financing the personal consumption rather than for business processing.

Keywords: loan, saturation, interest ceiling