Government and ADB agree to implement program to stabilize banking sector

2017-04-20 11:39:50
Ulaanbaatar /MONTSAME/ The actual risk of irregularity in financial intermediary functions of banks is very high for some Mongolian banks due to a great amount of non-performing loans. In this regard, the government has agreed with the Asian Development Bank on implementing a Program on Restoration of Banking and Strengthening Financial Stability in order to compensate the financial deficit in banks to fulfill gaps of payment.
The program is going to be implemented on the loan of USD 100 million. The loan repayment term is 15 years, with the alleviation of principal payment in the first three years.
The program includes 12 key measures to be taken, including establishing an asset management company, introducing a system that will be capable of resolving debt pressures of banks, configuration of some laws and regulations in order to ensure financial stability, improving monitoring and evaluation and governance in banking.
Payable balances of non-performing loans have been increasing, and, as of 2016, balance of non-performing loans made up for 14.2 percent (MNT 1.7 trillion) of the total outstanding loans. This was the highest point reached by the weight of non-performing loans.