On 31 July, the Bank of the Lao PDR (BoL) suspended applications for new non-bank financial institutions in Vientiane Capital.
Effective from the announcement date onwards, the suspension applies to both domestic and foreign investors seeking to establish deposit-taking microfinance institutions, non-deposit-taking microfinance institutions, and pawnshops in the capital.
BoL said it imposed the measure to give relevant authorities time to review the current operational status of these institutions and to reorganize and tighten licensing conditions, making them stricter and more efficient.
BoL expects to reopen applications by November this year under a new set of regulations. However, the bank has not yet disclosed the details of these new rules and said it will announce them at a later date.
The suspension is not expected to immediately affect existing borrowers or customers of non-bank financial institutions, as current operators can continue providing services.
However, it could temporarily limit the expansion of new lending providers in Vientiane, while authorities review rules aimed at strengthening oversight of the sector.
BoL confirmed that investors in other provinces can continue to apply to establish financial-related institutions as normal, by submitting proposals and required documents to BoL branches in their respective provinces or regions.
