Note: The data are provided for informational purposes only and in some cases, the information may be incomplete, not fully accurate or out of date. For more information on how data are compiled, see "A Note About Sources." The date of the last update for each country is marked in the section "Country Indicators." We welcome updates and comments. Click here to write to us.
Mongolia
Country Indicators
Information Last Updated
July 2007
Information Compiled by
Jeremiah Grossman, IRIS Center
Information Verified by
N/A (not verified)
Population (Millions)
2.6 [2005]
Population Density (per sq km)
2 [2005]
GNI per capita (US$)
690 [2005]
GNI per capita (PPP US$)
2190 [2005]
Total Unemployment (% of labor force)
14 [2003]
Employment in Agriculture (% of total employment)
42 [2003]
Gross domestic saving (% of GDP)
28 [2005]
% Population under $2/day (PPP)
75 [1998]
Size of informal sector
30% of GDP (DAI and WB study cited in Oyungarjal 2002)
Depth of Financial Sector (M2/GDP)
44 [2005]
Exchange rate
1 USD : 1158.5 MNT, as of 9, July 2007
Percentage of population with access to banking services
Access to finance has increased dramatically in Mongolia in recent years. Today, there is at least one bank providing microfinance services in every village or township, and 72% of all herders have loans outstanding (Nyamaa, forthcoming)
Ownership structure of banks (and financial institutions if available)
BANKS: Of the 17 commercial banks, 1 is wholly state-owned, 2 have minor state participation, and the other 14 are privately owned. Of the 14 privately-owned banks, 6 are partially foreign-owned (5 have majority foreign ownership). NBFIs: Of the 150 NBFIs, 13 have full or partial foreign ownership (Annual Report 2005, BOM).
1. AGRICULTURAL SECTOR DEVELOPMENT PROGRAM (ASDP): In 2005, Bank of Mongolia (BOM) lent US $ 6.1 million (MNT 7.1 billion) to banks, which on-lent US $ 8.3 million (MNT 9.6 billion) for agricultural activities. This was an Asian Development Bank (ADB) -sponsored project
2. EMPLOYMENT GENERATION PROJECT: Another ADB-sponsored project, under which the BoM provided banks with US $ 2.4 million (MNT 2.8 billion) in 2005 for job creation and employment generation loans.
3. KfW PROGRAM LOAN: This Germany-sponsored development project aims at supporting export-oriented small and medium enterprises. Total funds on-lent as of the end of 2005 equaled US $ 8.4 million (MNT 9.7 billion) (Annual Report 2005, BOM)
Definitions of microfinance or microcredit
Not formally defined; generally, the Asian Development Bank's definition is used: "Micro-finance is defined as the provision of a broad range of financial services such as deposits, loans, payment services, money transfers, and insurance to the poor and low-income households and micro-enterprises." Old Sub-Sector Review (2002), UNDP
NGO microfinance provider formalization or transformation issues
Licensing of NGOs as NBFIs currently under discussion by Parliament and the Government of Mongolia Cabinet
Ongoing microfinance policy development status
Amendments are being proposed to the Cooperatives Law
Safety net availability: insurance, pension, etc.
Pension, benefit, health, worker's compensation, and unemployment insurance. Program is funded through employer, employee, and government contributions (Social Insurance Law)
General Participation in the Financial Services Market
No. of institutions
No. of clients
Total Assets
Deposits
Target Market
Constraints to provision of microfinance services
Banks
Commercial Banks
17, with 732 branches and units (as of end of 2005). As of 2006, 3 of the 17 banks were concentrating large percentages of their portfolios on the microfinance market, and 4 others were providing microfinance services in addition to traditional banking services (Annual Report 2005, BOM)
(Nyamaa, forthcoming)
CURRENT ACCOUNT HOLDERS: 899,600. DEPOSITORS: 627,600. BORROWERS: 322,700 (as of end of 2005) (Annual Report 2005, BOM).
Approx. 970 (as of 2006). However, only about half were operational and only 117 were licensed by the Financial Regulatory Commission (FRC) (Nyamaa, forthcoming)
Activity that determines required regulatory status
Banks
Banks
(Banking Law); The Law on Central Bank; and related amendments
For-profit legal entity with paid-in capital consisting of cash funds invested by shareholders, who are liable to extent of invested capital. Banks provide financial intermediary services, including deposit-taking, credit, and current account (the last with special permission of Bank of Mongolia). Banks may be state-owned, private, or jointly-owned, and they may be general or specialized (Banking Law)
Bank of Mongolia (BOM), Legal and Supervision Department
Deposit-taking by an institution licensed and regulated by the Bank of Mongolia
A cooperative is defined as a legal person that (i) is established by individuals on a voluntary basis to satisfy social and cultural needs; (ii) is governed and supervised democratically; and (iii) conducts its business on the basis of common ownership by its members. Savings and Loan Cooperatives (S&LCs) are permitted to carry out certain banking activities, including credit and savings services Sub-Sector Review of Legal Environment of Microfinance in Mongolia
Financial Regulatory Commission (FRC) of Mongolia (Nyamaa, forthcoming)
Member-only deposit and lending activities.
Non-profit institutions
Public Benefit NGOs
NGO Law of Mongolia
"Public Benefit NGOs" are non-governmental organizations that operate for the public benefit with respect to any of the following: culture, art, education, science, health, sport, nature and environment, community development, human rights, protection of the interests of specific subgroups of the population, charity, etc. Sub-Sector Review of Legal Environment of Microfinance in Mongolia
Provision of financial services only in conjunction with a licensed partner (or illegally)
INCORPORATION: State Registration Agency. NAME AUTHORIZATION: Taxation authorities. LICENSE: Bank of Mongolia. NAME REGISTRATION: Intellectual Property Department (Bank Licensing Regulation, BOM)(Company Law)
Joint-stock or limited liability company (Banking Law)
Legal entities financed by the State budget, religious or non-government organizations and humanitarian funds are not entitled to incorporate or invest in the capital of a bank (Bank Licensing Regulation, BOM)
INCORPORATION: State Registration Agency. NAME AUTHORIZATION: Taxation authorities. LICENSE: Bank of Mongolia. NAME REGISTRATION: Intellectual Property Department (NBFI Licensing Regulation, BOM) (Company Law)
Legal entities financed by the State budget, religious or non-government organizations, and charity funds are not entitled to incorporate engage in NBFI activities (NBFI Law).
FOR THE TOP 10 SHAREHOLDERS OR SHAREHOLDERS HOLDING 51% OF THE PAID-UP CAPITAL (WHICHEVER IS GREATER):
BOARD MEMBERS; EXECUTIVE DIRECTOR; AND OTHER MANAGERS:
1) References re: the existence of any past-due loans or guarantees, tax debt, or prior criminal record.
2) References confirming their ethical and business reputation. They must have sufficient knowledge, skill, experience, and "moral maturity."
FOR EXECUTIVE DIRECTOR: Must also have at least 3 years of banking/financial sector and have strong management skills in the sector (Bank Licensing Regulation, BOM) (Banking Law).
Required. Must summarize economic reasons for bank licensure, bank's beginning balance, and 5-year business plan (Bank Licensing Regulation, BOM)
1) Must provide a list of all shareholders.
2) Must also confirm that Chairman and members of Board of Directors are bank shareholders
3) Must also provide the following information for: (i) any shareholder who will hold 10% or more of the paid-in capital; and (ii) the top 10 shareholders or shareholders holding 51% of the paid-up capital (whichever is greater): 1) Audited financial statements of their business entities for the previous two years (Bank Licensing Regulation, BOM) (Banking Law).
Bank charter must include operational regulations re: shareholders' meetings, Board of Directors, rights and duties of Executive Director, carrying out deals that "would substantially affect bank activity", and internal audit procedures (Bank Licensing Regulation, BOM)
Minimum capital must be paid in prior to licensing application. Shareholders must prove that capital was raised from legal sources. Bank loans are prohibited.
Non-bank Financial Institutions
Non-bank Financial Institution
FOR CHAIRMAN, BOARD MEMBERS, AND EXECUTIVE DIRECTOR: No past-due loans/guarantees; no criminal record; ethical/business reputation must not adversely affect management of the NBFI. In addition, all executive management must have both education and experience in banking and finance (NBFI Law)
Any shareholder with more than 10% of total shares must be audited, including review of the shareholder's last 3 years of financial documents. Sources of start-up capital must be disclosed. (NBFI Licensing Regulation, BOM) (NBFI Law)
Must provide regulations addressing shareholder and Board of Director meetings; internal audit procedures; administrative policy; guidelines re: establishment of a unit; fee guidelines; profit distribution guidelines; guidelines for addressing workplace disputes; guidelines re: lending activities and repayment, issuing guarantees, collateral, and interest rate policy; and others (NBFI Licensing Regulation, BOM) (NBFI Law).
Charter must specify procedures regarding: accounting for income, expenditures, and distribution of income; involving non-members in the business of a cooperative; admission, withdrawal, and exclusion of members; cooperative management's powers and responsibilities; establishing a reserve fund; establishing branches and representative offices; internal and external auditing; reorganization, liquidation, and federation; and other provisions (Cooperative Law)
CAR (Capital to Risk-Weighted Assets): Min. 10%. TCAR (Tier I Capital to Risk-Weighted Assets): Min. 5%. TACAR (Tier I capital to Total Assets): Min. 5%. If the general risk level of the bank is higher than average, these ratios may be increased (Prudential Ratios Regulation, BOM).
TIER I CAPITAL: Stock (common stock, callable bond); reserve fund distributed from net profit; retained earnings and loss; additional paid-in capital (of common stock); donation capital. TIER II CAPITAL: Preferred stock; additional paid-in capital (of preferred stock); gain on revaluation; social development fund; subordinated debt with maturity of over 5 years. (Prudential Ratios Regulation, BOM).
0%: Cash; current accounts and deposits at BOM; Central Bank bills and accrued interest receivables; government bills (up to 1 year). 20%: Cash in transit; claims on domestic banks/FIs (up to 1 year); certain claims on foreign banks/FIs; certain loans confirmed by foreign-bank guarantees; government bills (over 1 year); foreign trade letters of credit. 50%: Certain claims on foreign banks/FIs; certain loans confirmed by foreign-bank guarantees; mortgage loans; guarantees from bids and execution; credit lines. 100%: Claims on domestic banks/FIs (over 1 year); certain claims on foreign banks/FIs; certain loans confirmed by foreign-bank guarantees; all other loans; precious metals; government investment bills; other bills; all other assets; guarantees , standby letters of credit, and promissory notes. 150%: Certain claims on foreign banks/FIs; certain loans confirmed by foreign-bank guarantees (Prudential Ratios Regulation, BOM).
US $ 172.6 thousand [200 million MNT] in Ulaanbaatar; US $ 86,318[100 million MNT] in Darkhan Soum -- Darkhan-Uul Aimag, and Bayan-Ondor Soum -- Orkhon Aimag' and US $ 8,631 [10 million MNT] elsewhere. In addition, any NBFI providing electronic, trust, or remittance services must have a minimum of US $ 431.6 million [500 million MNT] (Annual Report 2005, BOM).
Loan loss reserves (and reserves for contingent liabilities) and other asset reserves shall be created as a percentage of the corresponding asset as follows:
Performing: 1%
Non-performing:
In arrears: 5%
Sub-standard: 25%
Doubtful: 50%
Loss: 100%
LIQUIDITY: The ratio of liquid assets to total deposits including financial sources, other liabilities and current account can not be less than 10%. Liquid assets are a sum of cash, current and saving account in banks, and ND Government securities. RESERVES: Reserve fund not required because deposit-taking is prohibited Sub-Sector Review of Legal Environment of Microfinance in Mongolia (NBFI Licensing Regulation, BOM)
(Nyamaa, forthcoming)
PERMITTED: Deposits, loans, payment services, guarantees, foreign exchange, securities, financial leasing, investment and consulting services, and other financial services. PROHIBITED: Non-banking business activities, except for temporarily holding/selling property taken as security (Banking Law)
Must request permission for branch licenses from BOM. For decisions to open, close, move, or restructure branches, BOM should be informed and presented with evidence justifying decision. However, settlement centers, foreign exchange points, savings units, and representative offices in rural areas may be set up without permission. In addition, any changes in paid-in capital, organizational structure, membership, and shareholder composition must be approved by BOM (Bank Licensing Regulation, BOM)Sub-Sector Review of Legal Environment of Microfinance in Mongolia.
Total loans and guarantees provided to one individual or related group: Not to exceed 20% of bank’s capital. Total amount of guarantees: Cannot exceed total amount of bank’s capital. Total Fixed Assets: Max. 8% of total assets. Total Securities: Max. 10% of shares of any one company; aggregate max. 20% of bank's capital (not applicable to securities issued by government or Central Bank) (Prudential Ratios Regulation, BOM) (Issue of Guarantees Regulation, BOM) (Banking Law).
Total loans and guarantees given to individual bank director, officer, shareholder or board member not to exceed 5% of bank capital; total amount lent to all insiders not to exceed 20% of bank capital. Such loans may not be on terms more favorable than generally-applicable terms (Banking Law).
Non-bank Financial Institutions
Non-bank Financial Institution
PERMITTED: Lending; factoring; financial leasing; guarantees; issuing payment instruments; electronic payments and remittances; foreign currency exchange; trust services; investment in short-term financial instruments; and investment/financial consultancy/information services. In addition, with BOM permission, NBFIs may provide certain services offered by banks. PROHIBITED: Activities not expressly permitted in license; deposit-taking; accepting deposits through issuance of payment instruments (NBFI Law) (Banking Law).
BOM permission required to establish or move branches, representative offices, or other units. In addition, any changes in paid-in capital, organizational structure, membership, and shareholder composition must be approved by BOM (NBFI Law) (Sub-Sector Review, UNDP).
Total loans and guarantees provided to one individual or related group: Max. 30% of NBFI’s capital. Total aggregate amount of guarantees: Max. 70% of NBFI’s capital. Total amount lent or guaranteed to shareholders, Directors, Officers, or other related parties: Max. 10% of NBFI’s capital per individual; max. 25% of NBFI's capital aggregate (NBFI Law).
Total amount lent or guaranteed to shareholders, Directors, Officers, or other related parties: Max. 10% of NBFI’s capital per individual; max. 25% of NBFI's capital aggregate (NBFI Law).
No specific regulations re: opening/closing branches and units. Once registered, a cooperative may open branches and units. Changes with respect to the type of business activities, mandatory contributions, and other related matters must be approved by at least 3/4 of the membership Sub-Sector Review of Legal Environment of Microfinance in Mongolia (Cooperative Law)
Depositor protection mechanisms (e.g., deposit insurance or lender of last resort)
Banks
Banks
Annual onsite inspection; off-site review of reports (see "Disclosure and reporting requirements") (Annual Report 2005, BOM)
MONTHLY:
1) Financial statement.
2) Reports re: capital adequacy ratio; asset/liability maturity mismatch; loans and other credit to top 20 borrowers of bank and to related persons; loan loss provisions; off-balance sheet guarantees and letters of credit; foreign exchange risk.
ANNUALLY: Audited financial statements (Prudential Ratios Regulation, BOM) (Banking Law).
MONTHLY AND QUARTERLY: Must submit prudential ratios to BoM. QUARTERLY AND ANNUALLY: Must submit financial statements (balance sheet, profit and loss statement, cash flow statement, footnotes, and clarifications) to BoM. NBFI must also disseminate publicly its audited annual financial statements (NBFI Licensing Regulation, BOM) (NBFI Law).
All financial institutions must pay personal income tax and economic entity/organization income tax. The corporate income tax rate is 15% on gross profits up to US $ 86.3 thousand [MNT 100 million], and then 30% on all profits exceeding US $ 86.3 thousand [MNT 100 million] Sub-Sector Review of Legal Environment of Microfinance in Mongolia
Credit Rating and Reporting Requirements: Formatting requirements (e.g., CGAP, GAAP, or other international standards)
Security interests: Forms accepted
Competition/Consumer protection rules: standard disclosure formats
General Applicability
General Applicability
2005 Law on Non Judicial Foreclosure for Charged Immoveable Properties permits parties to agree to avoid going to court in certain cases when a loan from a bank or NBFI is not repaid (Annual Report 2005, BOM).
