VIENTIANE, June 20 (Xinhua) -- Informal finance services continue to be a key player in the Lao banking sector despite the rapid growth of legal micro-finance institutes across the country, local daily Vientiane Times on Wednesday quoted a World Bank report as saying.
The international financial institute's mid-year economic monitoring report for the Lao People's Democratic Republic (Lao PDR), released last week, highlighted the overall economic development in the landlocked country. The expansion of the Lao banking sector was discussed in the latest update.
According to the World Bank report, which cites data from Lao authorities, the legal micro-finance sector saw rapid expansion around the country. The total assets of micro-finance institutions in Laos reached 450 million U.S. dollars by the middle of last year.
This figure marked an 11 percent increase over the same period last year, accounting for about 3 percent of the Lao GDP, the report said.
The report also highlighted that the proportion of Lao adults using at least one regulated financial service was 47 percent in 2014, higher than Myanmar at 30 percent, but lower than Nepal at 61 percent during the same year.
Despite the expansion of banking and non-banking financial institutions in Laos, informal financial services continue to play a key role in supplying funds to a sizeable proportion of the population.
The reported proportion of adults using unregulated financial services was as high as 60 percent in 2014, compared to 33 percent in Myanmar and 21 percent in Nepal, the report said.
The World Bank report further said the interest rates offered by informal finance services in Laos were higher than those of formal financial institutions in the country, however, this had not discouraged the Lao people from using their services.
The strength of Lao informal finance services was that the bank imposed fewer procedural requirements, which made it easier for people to access commercial loans, the report added.
Lao officials admit that pressing problems faced by business people in accessing investment and business expansion credit were due to the number of processes they have to undertake before getting commercial loans, according to the report.
The Lao government has promised to streamline the loan approval process to help businesses access funds to invest in and to expand their businesses.