The Central Bank of Mongolia conducted a poll survey of loans and saving rates among commercial banks in the fourth quarter of last year.

The survey involved 14 senior officials from banks.  According to the survey, commercial banks issued 7 trillion MNT in loans in 2012. This is a 24.1 percent increase on the previous year. The weighted average interest rose to 18.2 percent gaining 2.7 percent.

During 2000 to 2007 a good time in foreign and domestic markets caused loan interest rates to collapse.

But loan interest has risen up to 18.2 percent since last April. Organisations say that the commercial bank interest loan rates that are near to 20 percent are too high.

In the survey the Central bank asked: “Do you think loan interest is high”, in order to observe commercial bank’s views.

Most of the bank officials replied that the loan interest rate is high.

The explanation given for the high loan interest is due to scarce and high valued loan sources. According to the survey 57 percent of commercial bank loan interest is not based on the Central Banks interest rate, but instead consider expenses and other bank`s average interest and savings interest rate.

The survey indicated that commercial banks make up an assessment for loans of 54 percent from savings, 24 percent from current account and 16 percent from foreign investment sources.

Only one of the commercial banks in the survey revealed that it could decrease its savings interest rate in three months while 54 percent of them replied to decrease in 3-9 months and15 percent would do so in 9-12 months.

The remaining 15 percent revealed that they would not decrease their savings rate.

The survey indicated that when the savings rate is not decreased the fall in loan interest rates is impossible.

Over 35 percent of the commercial banks involved in the survey revealed they would increase their loan interest in 2013 while 57 percent said they would make no changes. Only 7 percent of them promised to decrease loan interest rates.