Banks account for 95.6% of the capital market in Mongolia,
with the stock exchange, saving and loan cooperatives, and insurance companies together
making up the remaining 4.4%. The insurance sector occupies only 0.9% space. So
far this year, commercial banks’ transactions have reached MNT1trillion, equaling
70% of the GDP. Loans form 61% of this and cash transactions 33%. Banks have
been reluctant to grant loans, the volume of which has decreased from previous
years.

Mongolia ranks 99^th among 139 countries in global competitiveness
but comes last in loan allotment. Credit is expensive and inadequate. Besides short-term
loans are easier to get while proper business planning needs long-term credit.
There is increasing demand from all sectors, from mineral exploitation to
drinking water to mining equipment.

Citizens’ savings stood at MNT600 billion at the end of September, indicating
areturn of faith in banks.  Banks’ prompt
payment capacity has also gone up but this could be better, according to
B.Lkhagvasuren, head of the Control Board of the Mongol Bank.

There are 14 commercial banks in the country, but no foreign bank has a branch
here. Bad debts are 9% of total loans, a sharp fall from 20% in November 2008.