Two months ago, Yim Rom, a villager from a remote area in Kampong Thom province, sold her land to off a paid debt to a microfinance institution.

Rom, 57, who now lives in Soung Sang village in Kampong Thom province’s Santuk district’s Kraya commune, told VOA Khmer that she borrowed $4,200 from a microfinance institution, or MFI, in May last year to buy a tractor.

“But I didn’t buy it. I spent the money on other necessities, like buying rice and food and my child was also sick,” said Rom. A laborer working on the cassava farms, she earns 20,000 Riel (about $5) per day.

“I was also sick and I needed money for treatment. I couldn’t pay for two months and the microfinance agent came to meet me and pressured me to pay,” she said in a recent interview with VOA Khmer at her home.

“They came to ask me to pay money and I was terrified and then I sold my land. First I paid on time, but later I could not pay due to a shortage in basic living necessities and I was sick as well,” she added.

She decided to sell her land, a plot of about 100 hectares, for $4,000 and after repaying her loan there was little money left.

The difference between the debtors’ actual practices and the plans outlined in loan application forms have become a national concern due to the burdens they place on a large number of Cambodians, particularly those relying on agriculture and vulnerable to floods and price fluctuations.

Kea Borann, CEO of AMK Microfinance Institution Plc, and a director at Cambodia Microfinance Association said borrowing money is like “a double-edged sword.”

According to Borann, an estimated 3 million Cambodians owe money to banks and MFIs, with estimates suggesting eight out of ten Cambodians are in debt.

Besides commercial and specialized banks, Cambodia has more than 70 microfinance institutions and 170 rural credit operators, according to the National Bank of Cambodia (NBC).

Microfinance institutions and credit operators lent a total of $3.9 billion to 1.75 million borrowers by 2017, women making up more than three-quarters of those in debt, according to the NBC.

In August, the government asked all lenders not to penalize borrowers if they were late paying installments due to flooding destroying their crops.

In February 2017, financial institutions were required by the government to declare themselves as private institutions to differentiate themselves from state-owned enterprises

Rom says she was unaware of the high-interest rate when she took out the loan. Since April 2017, the interest rates on new loans from MFIs and rural credit operators was set to a maximum of 18 percent. Prime Minister Hun Sen said that the MFIs and credit operators previously offered loans with interest rates of between 20 and 30 percent per annum.

“I just know I pay monthly. I don’t know the total and I don’t know how to calculate it either,” said Rom.

According to Rom’s documents, the interest rate is 1.5 percent per month until May 2020.

Chan Sophal, an economic analyst and director of Center of Policy Studies, said most villagers have limited knowledge of finance.

“Some people may think the monthly interest of 2 or 3 percent is not much, but it is actually a lot. It is hard to run a business and earn income to pay about 30 to 40 percent per year,” he said.

Sophal added that some MFIs had started to charge extra fees to make up for the cap on interest rates.

Rom’s documents showed that she was charged an “administrative fee” every month of $14.

Officials at NBC could not be reached for comment.

Lay Phal, Soung Sang village chief, said out of total 170 families in his village, 90 percent have borrowed money from MFIs and banks.

“I never educate them about borrowing money. They never ask me either. They accept money and agree with the bank agents. It is voluntary. There is no force,” he said.

“If I don’t sign [the documents] and say something to stop them, they will say I am bad,” he added.

Keo Chheng, Kroyea commune chief, said microfinance agents study customers’ living conditions before giving any loan.

“Their agents study the debtor’s living condition before allowing them to borrow money,” he said. “We just wait to certify their documents of land or housing,” he added.

However, economic analyst Chan Sophal questioned the “comprehensive study” agents claim to perform.

“Microfinance or finance lenders depend on their agents and they set plans for them to seek customers. The agents have to look for more customers. And this can lead to an inadequate study of borrowers’ living conditions,“ he said.

“Sometimes they say that borrowing money is to use on this thing, but actually they use it for other things,” he added.

If the lending institutions need villagers’ land or house title certifications, Sophal said, “this lacks professionalism, responsibility, and ethics.”

Rom continues to work on local cassava farms and a Vietnamese-owned rubber plantation to feed her family. Her son has also fallen into debt.

“He ran away from home since he could not pay the debt. Now I took his land since I moved to live on his land and I paid the bank for him,” she said. “I am also concerned that I couldn’t pay in the future,” she added.

“There is no hope because there is no land. My income all goes to the bank.”