You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

July 23, 2019

Laos Updates Regulatory Framework for Commercial Banks

Subscribe to Updates

On June 7, 2019, Laos’ official electronic gazette published the updated Law on Commercial Banks No. 56/NA, as amended, dated December 7, 2018. The law came into effect 15 days after its publication in the gazette. Banks already established in Laos have two years to implement the new rules, except the increased minimum registered capital requirements for which they have five years.

Registered Capital

The minimum registered capital has been raised from LAK 100 billion (approx. USD 11.5 million) to LAK 500 billion (approx. USD 58 million), while the minimum registered capital for Lao branches of foreign commercial banks has been raised from LAK 50 billion (approx. USD 5.8 million) to LAK 300 billion (approx. USD 34.5 million).

Appointment of Executives

Appointment and dismissal of executives must receive consent from the Bank of the Lao PDR (BOL), though the extent of the BOL’s scrutiny is not mentioned in the Law on Commercial Banks. Executives of a commercial bank are defined as members of the board of directors or its component committees, members of the directors’ council, department heads, and branch heads.

Governance

The updated law also clarifies a number of governance structures, including the board of directors, its component committees, and the director’s committee (consisting of the director and deputy director, responsible for acting on various issues as the legal representative of the company). It also details procedures for appointing and dismissing executives, which requires the consent of the BOL, and for scheduling and conducting shareholders’ meetings.

Reporting

On a monthly, quarterly, and annual basis, commercial banks must produce a financial report, a cash flow report, and a report on operations. This information, and information on the soundness of the commercial bank, must be made available via the bank’s website or another publicly accessible platform. Bank clients and the BOL must be also notified about the availability of the reports.

Preventive and Remedial Measures

In addition to meeting requirements for maintaining adequate capital—which can vary based on the BOL’s determination—there is a new obligation for commercial banks deemed important to the stability of the Lao banking system to devise plans for handling financial, economic, or other relevant crises. The plans must be in accordance with BOL policy and must be updated annually.

For more information on this development, or for any other queries about the banking and financial industry in Laos, please contact Tilleke & Gibbins at [email protected].

Related Professionals

Practices

Banking and Finance

Location

RELATED INSIGHTS​ 

July 4, 2025
On July 3, 2025, the Trade Competition Commission of Thailand (TCCT) officially announced an invitation for stakeholders to participate in a public survey to gather feedback on the flexibility and appropriateness of credit terms across different business sectors for goods and services. The TCCT initially introduced guidelines on unfair trade practices related to credit terms applicable to small and medium-sized enterprises (SMEs) in 2021, with amendments following in 2022. The guidelines have had a wide impact, as businesses have had to adapt their payment procedures and practices, particularly those for dealing with SMEs, to comply with the guidelines. The TCCT is now seeking comprehensive feedback from businesses and other stakeholders to evaluate the effectiveness and practicality of these guidelines. The collected responses may potentially lead to future amendments aimed at enhancing fairness and efficiency in business transactions. To summarize the core principles, the guidelines aim to improve the liquidity and cash flow of SMEs, stipulating payment terms of: Within 30 days for agricultural products or primary agricultural processing involving non-complex production. Within 45 days for trade, manufacturing, and service sectors. The guidelines also identify practices deemed unfair, including: Unjustified delays in payment beyond agreed credit terms. Changes to credit terms or contractual conditions without at least 60 days’ advance notice. Other unfair conduct or credit term conditions that impose excessive burdens on an SME. Interested stakeholders are encouraged to submit their feedback through the TCCT’s online survey form available via their official public media channels. The survey is open for responses until July 20, 2025.
Read More
July 2, 2025
On June 27, 2025, Vietnam’s National Assembly adopted a Resolution on International Financial Centers in Vietnam (“IFC Resolution”), which is set to take effect September 1, 2025, putting forward major policy breakthroughs on multiple fronts. The IFC Resolution has the goal of turning Ho Chi Minh City and Da Nang into leading international financial centers with autonomy and tools to compete, thereby raising Vietnam’s position in the global financial network, in association with economic growth drivers. Below are some of the key points of the IFC Resolution, which has notable changes from previous drafts (see our articles on Vietnam’s Draft Resolution on Financial Centers: Implications for Fintech and Banking and Vietnam’s Emerging Regulatory Landscape for Blockchain and Cryptocurrency), including: The removal of the Central Supervisory Agency. The addition of a definition of international financial centers, which are specific geographic areas in Ho Chi Minh City and Da Nang with members entitled to special policies. The addition of a list of entities eligible for membership, and entitlement to the special policies. Major Policy Breakthroughs The IFC Resolution introduces specific policies in the following areas: Liberalization of foreign exchange control for members, including policies such as open foreign exchange use between members and exemption from foreign exchange control procedures for 100% foreign-owned members. Specialized licensing for members to establish and operate single-member limited liability banks and foreign bank branches with the ability to apply accounting standards, debt classification, risk provisions, and prudential ratios according to the owner’s policies. Creation of a capital market for innovative startups, including a crowdfunding mechanism or private placement mechanism through a licensed platform, and development of a green finance market with green certification. Creation of a regulatory sandbox for fintech technologies, products, services, and business models not yet prescribed by law, offering exemption from compliance with
Read More
June 30, 2025
On April 29, 2025, the State Bank of Vietnam (SBV) issued Circular No. 03/2025/TT-NHNN (Circular 03), which provides detailed guidance on the opening and use of Vietnamese dong (VND) accounts by non-resident foreign investors engaging in indirect investment activities in Vietnam. Circular 03, which took effect on June 16, 2025, amends Circular No. 06/2019/TT-NHNN of the SBV on the management of foreign exchange for foreign direct investment activities in Vietnam (Circular 06) and replaces Circular No. 05/2014/TT-NHNN of the SBV guiding the opening and use of indirect investment capital accounts for implementation of foreign indirect investment activities in Vietnam (Circular 05). Below are some of the key points of Circular 03. Change of Account Name Circular 03 renames “indirect investment capital account” to “indirect investment account” (IIA). This change aligns with the terminology used in other legislation, ensuring consistency across Vietnam’s legal framework governing foreign exchange and investment activities. Additionally, by removing the word “capital,” the new term better encompasses the full range of transactions that may be conducted through these accounts, such as share transfer and other forms of indirect investment-related activities. This helps prevent misinterpretation and facilitates compliance for foreign investors operating in Vietnam. Account Types Circular 03 clearly delineates account types and investor residency status as follows: For non-resident foreign investors: The opening and use of investment accounts in VND is for carrying out transactions related to indirect investment activities. For resident foreign investors: Credit and debit transactions are made through payment accounts in VND in accordance with relevant laws. Additional Permitted Uses of IIAs In addition to the cash inflows and outflows authorized under Circular 05, Circular 03 introduces more cash transactions that can be conducted via IIAs. These include: Receiving interest and other legal income when conducting stock purchase transactions that do not require
Read More
June 27, 2025
Tilleke & Gibbins has contributed the Cambodia, Thailand, and Vietnam chapters to Taking and Enforcing Collateral Security and Guarantees in Southeast Asia, a comparative guide developed by Drew Network Asia (DNA). The publication examines the legal frameworks governing collateral security and guarantees across seven Southeast Asian jurisdictions and is intended to assist financial institutions, corporate borrowers, and cross-border investors in evaluating secured lending options in the region. The guide provides a practical overview of key issues relevant to taking and enforcing security interests—covering, among other topics, the types of assets that may be secured, the formalities and registration requirements for creating security, and the rights and procedures available in enforcement scenarios. Each chapter follows a consistent question-and-answer format to allow readers to compare approaches across jurisdictions easily. While the guide offers a high-level survey of the region’s collateral and guarantee regimes, it also notes that country-specific developments and transaction-specific considerations may affect the applicable requirements. Readers seeking detailed advice are encouraged to consult the lawyers listed at the end of each jurisdictional chapter. The full guide is available for download using the button below or directly from the DNA website.
Read More