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Laos's draft deposit-protection law would tie cover to GDP per capita and bring in all deposit-taking MFIs

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Key points

Implications for lenders

Deposit-taking MFIs in Laos may face premiums of up to 1% that depend on their risk profile, so credit quality and governance can feed directly into funding costs. Compliance teams may need to plan for mandatory membership and risk-based premium assessments before the implementing rules arrive.

Implications

ExecutivesDeposit-taking MFIs and smaller banks should prepare for premiums that depend on their risk rating once implementing rules are issued.
InvestorsRisk-based premiums of up to 1% add a funding cost that varies by institution, which matters when valuing deposit-funded lenders in Laos.
OperatorsNon-deposit-taking lenders are outside the scheme; those planning to take deposits would enter a regime with mandatory membership and risk-based pricing.

Facts

The law: presenting the draft Law on Deposit Protection to the second ordinary session of the tenth National Assembly on 19 October 2026, the Governor of the Bank of the Lao PDR (BOL) said it has 66 articles in eight chapters 1. The report by the Lao News Agency (KPL) gives no date for the vote or for the law's entry into force.

Cover: today a depositor is protected up to LAK 100 million per member institution 2, which the Governor said is more than twice GDP per capita 3 and covers 94% of protected depositors in full 4. The draft requires the maximum to be at least three times GDP per capita 5, designed to protect at least 90% of insured depositors in full 6.

Premiums and members: members have paid a flat 0.1% a year since 1999 7; the draft moves to risk-based premiums capped at 1% 8. The Deposit Protection Office has 41 members 9, up from seven commercial banks in 2000: 35 commercial banks 10 and six deposit-taking microfinance institutions 11. Under the draft all deposit-taking MFIs must join, the roles of the BOL, the Ministry of Finance and the Office in the financial safety net are set out, and the Office gains a legal basis to use the fund for liquidity support or mergers when resolving troubled institutions (a 'paybox plus' mandate). The Governor linked the law to the 2026–2030 plan target of deposits above 90% of GDP 12.

Analysis

Over time: membership has grown to 41 (up from seven commercial banks in 2000), but the premium has stayed at 0.1% a year since 1999. The cover is a fixed kip amount, so inflation erodes it: consumer prices were still rising 7.7% year on year in October 13. Linking the ceiling to GDP per capita, which rises with nominal incomes, is designed to stop that erosion; the proposed ceiling (at least three times GDP per capita) would sit above today's level (more than twice GDP per capita).

Within Laos: the change matters most for the deposit-taking MFIs. A risk-based premium of up to 1% would be far above the current flat rate for the riskiest members, so the price of deposit funding would start to depend on each institution's risk profile. Mandatory membership also gives MFI depositors the same protection as bank depositors, which can support deposit funding for institutions that meet the Office's standards.

Counterpoints and uncertainties

The figures describe the draft as presented on 19 October; the final text as passed, the effective date and the BOL's implementing rules (premium bands, rating method, transition for MFIs) are not yet public and may differ. Nominal GDP per capita in kip rises with inflation and depreciation, so the cover rises in kip terms but not necessarily in dollar terms. A fund built on a 0.1% a year premium may be small relative to deposits if a large institution fails.

Key figures

  1. Articles in the draft Law on Deposit Protection: 66 articles in eight chapters. Length of the draft Law on Deposit Protection presented to the National Assembly. Draft Law on Deposit Protection. Basis date: 19 Oct 2026. Source: KPL (Lao News Agency): BOL Governor presents draft Law on Deposit Protection to the National Assembly (2026-10-19)
  2. Current deposit-protection cover: LAK 100 million. Maximum protected amount per depositor per member institution under the current scheme, as presented by the BOL Governor. Deposit Protection Office of the Lao PDR and its member institutions. Basis date: 19 Oct 2026. Source: KPL (Lao News Agency): BOL Governor presents draft Law on Deposit Protection to the National Assembly (2026-10-19)
  3. Current cover relative to GDP per capita: more than twice GDP per capita. Current per-depositor cover expressed as a multiple of GDP per capita, as stated by the BOL Governor. Deposit Protection Office of the Lao PDR and its member institutions. Basis date: 19 Oct 2026. Source: KPL (Lao News Agency): BOL Governor presents draft Law on Deposit Protection to the National Assembly (2026-10-19)
  4. Share of protected depositors fully covered today: 94%. Share of protected depositors whose deposits are within the current cover, as stated by the BOL Governor. Deposit Protection Office of the Lao PDR and its member institutions. Basis date: 19 Oct 2026. Source: KPL (Lao News Agency): BOL Governor presents draft Law on Deposit Protection to the National Assembly (2026-10-19)
  5. Deposit-protection cover in the draft law: at least three times GDP per capita. Maximum cover per depositor proposed in the draft Law on Deposit Protection, as a multiple of GDP per capita. Deposit Protection Office of the Lao PDR and its member institutions. Basis date: 19 Oct 2026. Source: KPL (Lao News Agency): BOL Governor presents draft Law on Deposit Protection to the National Assembly (2026-10-19)
  6. Share of insured depositors to be fully covered under the draft law: at least 90%. Share of insured depositors the draft law's cover is designed to protect in full. Deposit Protection Office of the Lao PDR and its member institutions. Basis date: 19 Oct 2026. Source: KPL (Lao News Agency): BOL Governor presents draft Law on Deposit Protection to the National Assembly (2026-10-19)
  7. Current deposit-protection premium: 0.1% a year. Flat annual premium paid by member institutions since 1999. Deposit Protection Office of the Lao PDR and its member institutions. Basis date: 19 Oct 2026. Source: KPL (Lao News Agency): BOL Governor presents draft Law on Deposit Protection to the National Assembly (2026-10-19)
  8. Ceiling on risk-based premiums in the draft law: 1%. Maximum premium rate under the risk-based premium system proposed in the draft law. Deposit Protection Office of the Lao PDR and its member institutions. Basis date: 19 Oct 2026. Source: KPL (Lao News Agency): BOL Governor presents draft Law on Deposit Protection to the National Assembly (2026-10-19)
  9. Deposit Protection Office members: 41 (up from seven commercial banks in 2000). Number of member institutions of the Deposit Protection Office. Deposit Protection Office of the Lao PDR and its member institutions. Basis date: 19 Oct 2026. Source: KPL (Lao News Agency): BOL Governor presents draft Law on Deposit Protection to the National Assembly (2026-10-19)
  10. Commercial-bank members: 35. Commercial banks that are members of the Deposit Protection Office. Deposit Protection Office of the Lao PDR and its member institutions. Basis date: 19 Oct 2026. Source: KPL (Lao News Agency): BOL Governor presents draft Law on Deposit Protection to the National Assembly (2026-10-19)
  11. Deposit-taking MFI members: six. Deposit-taking microfinance institutions that are members of the Deposit Protection Office. Deposit Protection Office of the Lao PDR and its member institutions. Basis date: 19 Oct 2026. Source: KPL (Lao News Agency): BOL Governor presents draft Law on Deposit Protection to the National Assembly (2026-10-19)
  12. Deposits-to-GDP target for 2026–2030: above 90% of GDP. Target for total deposits relative to GDP under the 10th National Socio-Economic Development Plan (2026–2030), cited for the law. Lao banking system. Basis date: 19 Oct 2026. Source: KPL (Lao News Agency): BOL Governor presents draft Law on Deposit Protection to the National Assembly (2026-10-19)
  13. CPI inflation, y/y: 7.7% (down from 7.8% in September). Year-on-year change in the consumer price index, Lao Statistics Bureau. Nationwide. Basis date: 31 Oct 2026. Source: Xinhua: Laos' inflation rate stands at 7.7 pct in October (2026-10-28)

Sources

  1. KPL (Lao News Agency): BOL Governor presents draft Law on Deposit Protection to the National Assembly (2026-10-19)
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Reports are for information only and are not investment advice.

A Japanese version of this article is available: 日本語版

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