Bad news from banks
According to a report from Mongol Bank, the outstanding loans of citizens and businesses has reached 12 trillion MNT.
In comparison with the same period of 2014 this figure increased by 1 trillion MNT. In addition to outstanding loans, the number of loan considered delinquent has also increased.
Presently, five percent of all loans at commercial banks are delinquent. In order to maintain the policy of not increasing the number of and delinquent loans, banks have decided to cut back on loan issuance.
As explained by officials from local banks, although demand for bank loans is very high, in order to protect banks from delinquent loans to protect borrowers from unmanageable debt, banks are maintaining a policy to only invest in low risk businesses.
Although this is a good policy for banks during a time of economic decline, this could be bad news for the public.
Spring is a season when many people are starting new businesses, and expanding their existing businesses. As the economic situation remains difficult, banks will provide loans only to businesses with high and stable demand on the market and sales that are not in decline.