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Policy & Regulatory Environment
On the 22nd June 2006, Regulation No. 10, issued by the Bank of Lao PDR, was endorsed by the Government of Lao PDR. This microfinance policy paper provides a promising first-step towards establishing a regulatory framework for microfinance institutions (MFIs) in the Lao PDR. The regulation will be applied, monitored and revised by the Microfinance Division at the Commercial Bank and Financial Institution Supervision Department of the Bank of Lao (BoL). The Microfinance Division is currently working on three key activities:
- Ensuring service providers are aware of the microfinance regulation to ensure that at the point of registration as MFIs, providers are able to comply with regulatory requirements;
- Assisting institutions currently required to follow the regulation to understand and adhere to their legal requirements;
- Constantly reviewing and taking practitioner feedback on the regulation and developing a new draft regulation that takes into account this feedback.
Regulation No. 10 is available to download in both English and Lao and gives an insight into the Government's vision for sustainable microfinance provision in the future. The regulation outlines the following:
- The definition of microfinance in the context of the Lao PDR;
- Licensing procedures for deposit taking microfinance providers (those that will take voluntary savings deposits from the general public for the purpose of on-lending);
- Registration procedures for non-deposit taking microfinance providers (those that provide services not including voluntary deposits unless specifically authorised by the Bank of Lao PDR to take them);
- The legal obligations of all microfinance service providers in relation to operations, including service provision, reporting standards and financial transparency.
The regulation provides a platform for all microfinance activities in the Lao PDR and is the framework within which all service providers need to operate.
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