Lao People’s Democratic Republic
Peace Independence Democracy Unity Prosperity
The Government No.: 329/GVT
Vientiane, October 25, 2017
On Deposit of Protection
The Government decrees that:
Article 1 Objective
This decree shall determine the principles, regulations and measures of management and inspection on the operation to ensure legitimate rights and interests of depositors, to create public confidence on financial institution system, and to contribute to stable maintenance and development of financial institutions in Lao PDR.
Article 2 Deposit Protection
The deposit protection is to protect the legitimate rights and interests of depositors of the members of the Deposit Protection Office.
Article 3 Definitions
Terms used in this decree are defined as follows:
Article 4 State Policy on Deposit Protection
The government promotes and supports the deposit protection by imposing policy, regulations and measures for the Deposit Protection Office to operate effectively for legitimate rights and interests of depositors.
Article 5 Basic Principles of Deposit Protection
Rights of protection shall comply with the following principles:
Article 6 Scope of Application
This decree is used for the Deposit Protection Office, members, depositors and relevant organizations concerning deposit protection.
Article 7 International Cooperation
The government promotes the foreign, regional and international cooperation on deposit protection through sharing lessons, information, techniques and expertise, human resource development for efficient and productive tasks, regional and global integration, and commitment to the treaties and agreements that Lao PDR is the member.
Article 8 Protected Deposits
Protected deposits shall consist of all deposits of individuals, legal entities and organizations, of members, unspecified in the Article 9 of this decree. The protected deposits are included demand deposits, saving deposits and terms deposits, in either local or foreign currencies, including principal and interest indicated by the Deposit Protection Office.
Article 9 Unprotected Deposits
Unprotected deposits shall consist of deposits of administrators, significant shareholders and board members of financial institutions, other financial institution deposits, national treasury deposits, government deposits, international organization deposits and security trading deposits.
Article 10 Rights and Obligations of Depositors
The depositors shall have rights and obligations as follows:
The Payment of Deposit Insurance
Article 11 Amount of Deposit Insurance
Amount of deposit insurance is the maximum amount, of which the Deposit Protection Office shall pay to depositors of the bankrupt members, including remaining principal and interest on the last day of business operations of the members.
The Bank of Lao PDR researches to determine the amount of deposit insurance in each period to ensure that each depositor receives deposit insurance not less than double amount of Gross Domestic Products per capita.
Article 12 The Payment of Deposit Insurance
The Deposit Protection Office shall pay the insurance to depositors of the members since bankruptcy declared by the Bank of Lao PDR.
Insurance shall be paid in Kip (LAK) currency according to exchange rate specified by Bank of Lao PDR on the last day of business operation of the bankrupt members.
Article 13 Preparation of the Insurance Payment
After issuing an agreement to appoint a Board of Rehabilitation, the Bank of Lao PDR shall notify the Deposit Protection Office within three business days.
Since notification, the Deposit Protection Office shall prepare the main tasks as follows:
<>1.2.3.The bankrupt member shall propose to the Deposit Protection Office and provide all relevant information and documents within 15 days after the declaration by the Bank of Lao PDR;
The member financial institution is authorized by the Deposit Protection Office to represent and pay insurance. An account shall be opened if the depositor does not have account with the financial institution.
The detailed processes of insurance payment are specified in regulations separately.
Article 15 The Repayment
After the financial institution is declared bankrupt, the Bank of Lao PDR shall appoint the Board of repayment with representatives from the Deposit Protection Office.
The priority of repayments shall be adhered in compliance with the Law on Commercial Bank and Decree on Microfinance Institution.
The Deposit Protection Office is the creditor of bankrupt financial institution in the total amount, paid to the depositors, shall be repaid according to the priority of repayments.
The Deposit Protection Office
Article 16 The Deposit Protection Office
The Deposit Protection Office, abbreviated to DPO, is the government organization equivalent to the department. It is non-profit and financially independent legal entity under the Bank of Lao PDR.
Article 17 Rights and Duties of the Deposit Protection Office
The Deposit Protection Office has rights and duties as following:
Article 18 Organizational Structure
The Deposit Protection Office has the organizational structure as follows:
Rights and duties of the divisions and sectors are specified separately.
Article 19 Board of Directors
The Board of Directors is the highest structure in the Deposit Protection Office. They are authorized to steer and lead all operations and be responsible for the assignments from the Bank of Lao PDR.
The Board of Directors, appointed by the Prime Minister, consists of 7 members as follows:
Article 20 Rights and Obligations of the Board of Directors
The Board of Directors has rights and obligations as follows:
Article 21 The Board of the Deposit Protection Office
The Board of the Deposit Protection Office manages daily operation, acts as a secretariat, and reports to Board of Directors.
The Board of the Deposit Protection Office consists of a head and some deputy heads.
The head of the Deposit Protection Office is appointed and dismissed by the Prime Minister at the proposal of the governor of the Bank of Lao PDR.
The deputy head of the Deposit Protection Office is appointed and dismissed by the governor of the Bank of Lao PDR.
Article 22 Rights and Duties of a Head of the Deposit Protection Office
The head of the Deposit Protection Office has rights and duties as follows:
Article 23 Fund of the Deposit Protection Office
The government contributes fund to the Deposit Protection Office by authorizing the Bank of Lao PDR to research and propose to government for consideration in each period at the proposal of the Board of Directors. In addition, fund from the Deposit Protection Office is the excessive income from fund management and contribution from other agencies.
Article 24 Fund Management of the Deposit Protection Office
Fund of the Deposit Protection Office is invested in the low-risk fund management activities, such as the government bonds and the Bank of Lao PDR’s bonds.
The Deposit Protection Office is obligated to manage fund in stable and expandable manner.
Article 25 Accounting
The accounting year of the Deposit Protection Office starts on 01 January and ends on 31 December of every year.
The Deposit Protection Office shall follow the accounting system based on the laws and regulations that the Bank of Lao PDR imposes.
The Deposit Protection Office shall prepare financial reports based on format and regulations that the Bank of Lao PDR carries out.
Article 26 The Documents for Financial Report
The documents for accounting report of the Deposit Protection Office consist of:
The income statement and balance sheet shall have three columns: column “the Deposit Protection Office”, column “the Deposit Protection Treasury” and column “total”.
Article 27 Incomes – Expenditures
Incomes – expenditures of the Deposit Protection Office are included as follows:
The annual income is the negative or positive excess between incomes and expenditures within a year. The dividends, received in the treasuries, are agreed by the Board of Directors.
Article 28 Reporting
The Deposit Protection Office shall report the operational conditions and financial statements to the Bank of Lao PDR on monthly, quarterly and annually basis.
Deposit Protection Treasury
Article 29 The Deposit Protection Treasury
The Deposit Protection Treasury is established by the Deposit Protection Office to accumulate and use the premiums to pay the insurance to bankrupt member.
Article 30 Fund of the Deposit Protection Treasury
Fund of the Deposit Protection Treasury is generated from premiums of the members, excessive income from the protected deposit management, contribution from individuals or legal entities and loans.
Article 31 The Management of the Deposit Protection Treasury
The Board of Directors shall set out the regulation on the management of the Rights of Protection Treasury.
Article 32 The Utilization of the Deposit Protection Treasury
The Deposit Protection Treasury shall be utilized to disburse the insurance including the principal and interest of loans to the depositors
The excessive income from the management of the Deposit Protection Treasury in each year shall be used to operate the Deposit Protection Office as agreed by the Board of Directors.
Members of the Deposit Protection Office
Article 33 Membership
The commercial banks, licensed in accordance with the laws of Lao PDR before or after this decree has been effective, shall become the members as compulsory.
The commercial banks shall submit the proposal to the Deposit Protection Office for membership within 15 days since this decree becomes affective or the establishment is approved. The documents requesting for membership are as follows:
The deposit-taking microfinance institutions, licensed in accordance with the laws of Lao PDR before or after this decree has been effective, shall become the members and have the following criteria:
Article 34 Rights and Obligations of Members
The members have rights and obligations as follows:
Article 35 Premium Rate
The Bank of Lao PDR determines premium rate in each period at the proposal of the Deposit Protection Office. The premium rate in all currencies shall not exceed 1% of the average insurance balance per annum.
Article 36 Payment of Premium
The premium shall be paid quarterly according to the accounting year and considered as the expenditures of members. The payment procedures and processes of premium shall be indicated on the specific regulations of the Rights of Protection Office.
Article 37 Dismissing from Membership
The financial institution will be dismissed from its membership in below circumstances:
Article 38 Prohibitions for the Administrators and Officers of the Deposit Protection Office
The administrators and officers of the Deposit Protection Office are prohibited as below:
Article 39 Prohibitions for the Members
The members are prohibited from following actions:
Article 40 Prohibitions for Depositors
The depositors are prohibited as follows:
Management and Inspection
Article 41 Management Authorities
The government manages the rights of protection in a centralized and unified principle throughout the country by assigning the Bank of Lao PDR as the central coordinating agency with relevant agencies.
Article 42 Rights and Duties of the Bank of Lao PDR
In supervision of the Deposit Protection Office, the Bank of Lao PDR has the rights and duties as follows:
Article 43 Inspection Authorities
The Inspection Authorities on rights of protection include:
Article 44 Content of Inspection
The content of inspection on rights of protection is as follows:
Article 45 Types of Inspection
There are three types of inspection on the rights of protection as follows:
Regular inspection is conducted according to certain schedule and time indicated.
Inspection with advance notification is an unplanned inspection undertaken when it is deemed necessary. The inspected party shall be given notice in advance at least 24 hours.
Irregular inspection is a sudden inspection as a matter of necessity and urgency without notice given to the Deposit Protection Office in advance.
The inspection shall be undertaken for document and reality check at the relevant operation place.
Rewards for Those Who Perform Well and Measures for Those Who Violate
Article 46 Rewards for Those Who Perform Well
Any individuals, legal entities or organizations that achieve exemplary performance on implementation of this decree particularly on rights of protection in effective and efficient manner shall be complemented or rewarded according to regulations.
Article 47 Measures for Those Who Violate
Any individuals, legal entities or organizations that violate this decree and relevant regulations on rights of protection by causing damage to the state and public shall be subject to education measures, disciplinary measures, penalty, civil measures and criminal measures according to the seriousness of the violations.
Article 48 Education Measures
If this decree is violated for the first time and unintentionally, any individuals, legal entities or organizations shall be subject to education measures or warning and taking record.
Article 49 Disciplinary Measures
If administrators or officers of the Deposit Protection Office violate against the prohibitions as prescribed in the Article 38 of this decree shall be forced as follows:
Article 53 Symbol and Seal
The Deposit Protection Office has its own official symbol and seal to serve the official operation.
Article 54 Implementation
The Bank of Lao PDR, the Ministry of Finance, the Deposit Protection Office, members and relevant agencies are strictly assigned to implement this decree.
Ministries, ministry-equivalent bodies and local administration authorities shall acknowledge and cooperate the implementation of this decree in accordance with their functions and responsibilities.
Article 55 Effectiveness
This Decree shall become effective on signature and 15 days from official letter.
Requirements and provision, which contradict this law, are hereby repealed.
Government of Lao PDR
(Seal and Signature)