Two Korean-owned commercial banks in Cambodia have been accused of human rights abuses against vulnerable borrowers, where they allegedly used aggressive debt practices, according to a new report by a Korean NGO.
A 143-page report titled “Preying on Poverty” investigation by Korean Transnational Corporation Watch (KTNC Watch) accused KB Prasac Bank and Woori Cambodia Bank of widespread human rights abuses in Cambodia.
The banks, which were formerly microfinance institutions, were bought by large Korean banks in recent years. KB Prasac Bank, is KB Kookmin’s local subsidiary in Cambodia following its 70% acquisition, whereas Woori Bank, formerly Vision Fund (Cambodia) Ltd, was established after a merger between Woori Finance Cambodia Plc and WB Finance Co Ltd.
KTNC Watch conducted field investigations and interviewed 14 families, including indigenous communities, who reportedly suffered from excessive debt linked to the lending practices of KB Prasac Bank and Woori Bank. Rural women accounted for the majority of the banks’ borrowers — most are agricultural workers with low education and income levels.
“As debts ballooned with high interest rates and fees, borrowers were unable to make payments due to the economic crisis caused by COVID-19 and crop failures caused by climate change,” read the report.
The investigation found that frontline staff engaged in aggressive face-to-face sales tactics, encouraging customers to take on “excessive loans” using land as collateral. Credit officers allegedly promised easy access to money and urged borrowers to increase their debt burden.
The report also alleged that officers entered borrowers’ homes without consent, harassed families, publicly humiliated them, and threatened to call the police or send borrowers to jail. In some cases, borrowers were told their children would still be responsible for the debt, “even if the borrower died by suicide”.
In addition, the officers pressured borrowers to sell land or take informal loans to repay their debts.
The report highlighted that KB Prasac and Woori Cambodia charged high interest rates ranging from 15% to 18%, along with administration fees of 1% to 2% of the total loan amount.
In 2023, KB Prasac’s interest income per borrower averaged $1,126, while Woori Cambodia’s was $1,020. With Cambodia’s gross national income per capita at $1,810, the report noted that borrowers were spending 60% to 70% of their annual income on interest payments alone.
KTNC Watch called on the parent companies to urgently conduct a comprehensive and independent human rights impact assessment. The group also stressed that the South Korean government has a duty to prevent corporate human rights abuses abroad and ensure affected victims have access to effective remedies.
NGO rights group Licadho operation director Am Sam Ath said the investigation showed evidence that borrowers, especially Indigenous borrowers, are being harmed by predatory practices from Cambodian banks and MFIs.
“We hope that the Korean shareholders take the report’s recommendations seriously and immediately act to provide relief and remedy for borrowers, especially Indigenous borrowers,” he said.
A 39-year-old borrower, who only gave his first name, Ly, said he borrowed $20,000 from Woori Cambodia Bank and still owes around $10,000.
“There is some pressure [from the credit officer] when we don’t have enough money to repay, and they told us to sell our land to pay the debt,” Ly added.
The borrower mentioned that he is now struggling to earn money to repay the loan after his durian farm failed.
Cambodia Microfinance Association (CMA) spokesperson Kaing Tongngy said the KTNC report raises concerns that deserve attention, clarifying that KB Prasac Bank and Woori Bank Cambodia are not CMA members.
“We see these moments not only as challenging but as opportunities to demonstrate leadership and strengthen the sector’s long-term stability,” he said.
Tongngy emphasized that CMA does not tolerate coercion, threats, or pressure on borrowers or their families, stressing the importance of respectful treatment of clients and fair resolution of difficulties.
CMA operates a national borrower hotline where concerns can be reported safely, and that loan officers from member institutions receive regular training, with a focus on ethical conduct and cultural sensitivity, particularly in rural and high-risk areas, he added.
Both KB Prasac and Woori Cambodia banks did not respond at the time of publication. The National Bank of Cambodia could not be reached for comment.
