Law on Investment Bank ApprovedEconomy
Ulaanbaatar. January 18. /MONTSAME/. The State Great Khural discussed the draft law on investment banks and approved it accordingly. Now the discussion on the measures and related regulation of the new law is underway. The Governor of the Bank of Mongolia, B. Lkhagvasuren, clarified the law’s purpose, importance, and amendments.
He stated, “The member of the State Great Khural B. Javkhlan and 18 other members submitted a draft of this law under a different name, the Law on Foreign Investment Bank, in 2016. There were many amendments and changes to the draft law until it was approved today.” During that time, the Development Bank was the only big bank that invested in and implemented notable development projects and programs, causing the commercial banks not to invest in significant projects due to the prerequisite of the State Bank limiting 20% to one borrower. Therefore, the members submitted the law expressing the need for the investment bank to invite foreign investment. Later, they eliminated the word Foreign not to discriminate against domestic investment and the contradicting international standard.
The Governor of the Bank of Mongolia noted invalidating the law on Central Bank after the compliance of the new law. The Bank of Mongolia issued the investment bank permission to Development Bank in 2017.
He continued explaining that foreign and domestic investors can finance and invest in significant projects with the independent law on the investment bank, and the right to obtain permission has been opened. Until now, there was no legal regulation in our country for foreign and domestic enterprises and legal entities to obtain a license to operate functions related to the Investment Bank.
Unlike commercial banks, the law allows an opportunity to increase one’s capital. According to the new law, permission will be given to enterprises with 3-4 times the size of the equity fund of commercial banks.