Negotiable Certificate of Deposits

A securities market in Cambodia is in the early stages of development due to:

  1. Tradable instruments, such as government securities, have been issued with the aim to develop interbank market
  2. The existence of market determinants and a network of intermediaries; and
  3. Has been conducting the study in setting the policy rate to serve as a benchmark rate against how securities could be priced when they are issued.

Due to these reasons, the National Bank of Cambodia has set up an interbank market development project by issuing Prakas B-5-010-183 dated October 15, 2010 on The Issuance of Tradable Securities by the NBC.

The goals of the interbank market development project are:

  1. To promote the interbank lending on secured basis
  2. To have more effective instruments for implementing monetary policy and foreign exchange policy
  3. To reallocate financial resources among financial institutions and improve efficiency and growth of the financial intermediation
  4. To lessen banks reliance on depositors funds to meet their temporary short and medium liquidity needs
  5. To respond to the market needs for:
  • Investing temporary excess liquidity (Currently, there is no alternative way for banks to manage their excess liquidity)
  • Mitigating the risk associated with liquidity management and interbank lending after 3 years of preparation, the NBC officially launched its interbank market project on September 09, 2013


A Negotiable Certificate of Deposit (NCD) is a short-term interest bearing debt issued by the National Bank of Cambodia. It is issued in Khmer riel and U.S. dollar in order to help commercial banks and microfinance institutions invest their short term liquidity. The minimum denomination for investment is KHR 200,000,000 or USD 50,000. Both maturity of the KHR-NCD and USD-NCD ranges from 7days to 364days. The interest rate of NCDs is determined by NBC’s NCD Committee and the issuing mechanism has changed from on-demand mechanism to auction mechanism every week starting from August 08, 2023.

The advantages of holding an NCD include :

  1. No Credit Risk: Because NCDs are issued by the NBC (supported by Prakas B-5-010-183 the Issuance of Tradable Securities), there is no credit risk associated with the investment
  1. NCD has been issued in unit which per unit of USD-NCD equals to 1,000 USD and per unit of KHR-NCD equal to 1,000,000 KHR , so the NCD holders can sell or repo in unit
  1. Interest Earned: NCDs are an interest bearing instrument, therefore banks who invest their excess reserves in NCDs will earn interest, which will be paid on the maturity date to the current account of the NCD’s owner opened at the NBC. Interest will be calculated as followed:

Interest = Prt
- I is the Interest
- P is the principal amount
- r is the annual interest rate expressed as a percentage divided by actual number of days in each year
- t is the NCD’s tenor.

  1. Highly Liquid: NCD is a short term instrument, risk free, and issued by the central bank, therefore it can be traded in a highly liquid secondary market.

In the interim period, the NBC can repurchase NCDs at a discount price if the NCD’s owner is facing difficulties in finding counterpart.
The repurchased formula which will be used to buy the NCD back is:

  1. Transferrable: The NCD’s owner can transfer it to any party at any time in the interbank market. The NBC will transfer the ownership once it receives the notification from the buyer and seller.
  1. Collateralized: NCDs can be used as collateral for the credit facility from NBC and among interbank market

Though there are many benefits of investing in NCDs, potential investors should also be aware that:

  • Maturity of an NCD is determined by the NBC as such, investors may not be able to invest funds in a required maturity as they would like
  • The interest rate is determined by the NBC and fixed for the whole term of the NCD; therefore investors are unable to get a higher interest rate if the market rate rises
  • Any request to sell the NCD back to the NBC is subject to the NBC’s discretion. The NBC encourages investors to sell the NCD on the interbank market
  • The price at which NCDs will be purchased back is subject to the holding period and the NBC’s discount rate
  • At the time of investment, the investor may face interest rate risk as a result of market volatility.