Economists concerned about increase in non-performing loans
Economists have expressed concern over non-performing loans that banks have given to the private sector. Bankers said NPLs are currently higher than the rate of 3 percent set by the Bank of the Lao PDR, which could have negative impacts on financial and economic stability. A senior banker who asked not to be named said the rising NPL rate is linked to state infrastructure projects, with private companies waiting for the government to reimburse them so they can in turn repay their bank loans. One of the most important features to note is that people mostly use land titles as a guarantee to borrow money from banks. However, as a result of economic slowdown, it’s not easy to sell land and this is one of the factors driving up the NPL rate.
