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[[Category:Banks]]
Between 1928 to 1991, Mongolia had a central banking system, under which all commercial activities were carried out by the State Bank of Mongolia. Only state enterprises and government agencies were allowed to have savings accounts and receive credit.<ref>Goyal, Hari D. “A Development Perspective on Mongolia.” Asian Survey 39.4 (Jul. - Aug., 1999): 633-655.</ref>

According to the Ministry of Industry and Trade, a bank


:"is a for profit legal entity which has the paid in capital consisted of cash funds invested by shareholders and the shareholders of which bear financial liability to the extent of their invested capital and is engaged in financial intermediary services such as accumulating as deposits cash funds of others, extending loans on its own behalf and providing current account services with the special permission of the Bank of Mongolia."<ref>[http://mit.mit.pmis.gov.mn/en/download/laws/banking_law.pdf “Banking Law of Mongolia.”] Ministry of Industry and Trade. Retrieved on 2008-07-24</ref>


A bank could be state, jointly, or privately owned. It could also be a joint-stock or limited liability company, as well as a general or specialized bank.

A commercial bank is defined as one that is less than 51 percent controlled by the government, while a government-controlled bank is one that is at least 51 percent controlled by the Government of Mongolia and is barred from partaking in activities that may create market distortions. A specialized microfinance bank is one that has a limited license to participate in a number of financial services designed for the low-income community

Upon receiving authorization from the Bank of Mongolia, a bank is allowed to accept deposits; disburse loans; offer transaction services and guaranties to third parties; buy, sell, and issue securities; offer financial consultancy services, among other things.

A bank must comply with the regulations set by the Bank of Mongolia with respect to compulsory and liquid reserves, as well as capital adequacy, loan loss provisioning, and other foreign currency. It cannot restrict customers from using other banks’ services or make transactions from the customer’s account, without his or her consent. The bank must also provide its customers with correct and accurate information regarding its activities. Furthermore, the total value of loans, loan equivalent assets and guarantees provided to one person or a group of related people cannot exceed 20 percent of the bank's capital.<ref>[http://mit.mit.pmis.gov.mn/en/download/laws/banking_law.pdf “Banking Law of Mongolia.”]</ref> 

Of Mongolia’s 16 major banks, only three—[[Khan Bank]], [[Mongol Post Bank]], and [[XacBank]]—have a significant rural presence, and of the three Khan Bank has the largest rural branch network in the country.<ref>Gutin, John. 2005.  [http://www.khanbank.com/images/mR_11_Khan_Bank_The_Agricultural_Bank_of_Mongolia_1_04%5B1%5D.pdf Khan Bank, The Agricultural Bank of Mongolia.] USAID - U.S. Agency for International Development. Retrieved on 2008-06-24</ref> 

Several factors contribute to the lack of rural presence by the banking sector. For instance, Mongolia’s low population density and levels of rural economic activity contribute to a dispersed and uneven demand for financial services. Furthermore, rural financial service providers have to deal with seasonal fluctuations in demand, little collateral, and the costs associated with serving low-density rural areas, which explains why banks with existing infrastructure have been able to profitably enter the rural microfinance market.<ref>[http://www.khanbank.com/images/mR_11_Khan_Bank_The_Agricultural_Bank_of_Mongolia_1_04%5B1%5D.pdf Gutin, John.]</ref>

And although the majority of the rural population lives in the soum centers, branches, with the exception of three large soums, are generally established in aimag centers, due to limited economies of scale, high transaction costs, technical difficulties, and lack of qualified employees to serve as staff. Typically, to remain solvent a branch needs to operate in an area with a population of at least 10 to 20 thousand, though the average soum population is 2500.<ref>Hishigsuren, Gaamaa. 2006. [http://www.adbi.org/files/2006.02.dp42.ict.microfinance.mongolia.pdf Information and Communication Technology and Microfinance: Options for Mongolia.] Asian Development Bank. Retrieved on 2008-07-22</ref>

In order to reach these clients, banks such as XacBank have been trying several approaches including a mobile banking program, in which a crew from the aimag center visits the soum center once or twice a month to review and approve loans.<ref>[http://www.adbi.org/files/2006.02.dp42.ict.microfinance.mongolia.pdf Hishigsuren, Gaamaa.]</ref> The bank is also considering a soum-based Savings and Credit Cooperative (SCC) that, other than technical and operational support from XacBank, is operated by the local community,<ref>XacBank. [http://www.xacbank.mn/index.php?option=com_content&view=article&id=2&Itemid=3&lang=en| XacBank History.] Retrieved on 2008-07-07</ref> and has announced plans to begin a mobile phone banking program.<ref>[http://www.adbi.org/files/2006.02.dp42.ict.microfinance.mongolia.pdf Hishigsuren, Gaamaa.]</ref>

==Financial data==

As of December 2007, total assets of the banking sector reached MNT 3383.9 billion, increasing by MNT 1068.2 billion or 46 percent from the previous year.

Total loans outstanding also reached MNT 2098.7 billion, increasing by MNT 875.4 billion (68.1 percent) from 2006 (See Table 1). Non-performing loans dropped by 1.6 percent to MNT 67.7 billion, now representing 3.3 percent of total loans. Savings and time deposits of various individuals, companies, and other entities reached MNT 890.6 billion, increasing by 60.8 percent.<ref> Anod Bank. [http://www.anod.mn/mn/documents/blue_contents_eng.pdf Anod Bank 2007 Annual Report.] Retrieved on 2008-07-28. </ref>

{| class="wikitable" border="3"
|+ '''Table 1: Loans Outstanding (in million togrogs)'''<ref> [http://202.131.5.91/yearbook/2007/yearbook2007.pdf 2007 Statistical Yearbook of Mongolia].  National Statistics Office of Mongolia. </ref>
!  Banks
!  2004
!  2005
!  2006
!  2007
|-----
| [[Anod Bank]]
| align="right" | 101 716.4
| align="right" |  93 816.9
| align="right" | 120 855.0
| align="right" | 143 329.6
|-----
| [[Capital Bank]]
| align="right" |   8 764.6
| align="right" |  15 527.8
| align="right" |  22 804.7
| align="right" |  33 125.0
|-----
| [[Capitron Bank]]
| align="right" |  20 788.7
| align="right" |  27 922.8
| align="right" |  28 448.2
| align="right" |  69 306.5
|-----
| Chinggis Khaan Bank
| align="right" |  40 111.7
| align="right" |  39 838.9
| align="right" |  46 206.7
| align="right" |  74 614.5
|-----
| Credit Bank
| align="right" |   8 705.4
| align="right" |  10 575.4
| align="right" |   8 582.2
| align="right" |   5 531.1
|-----
| [[Erel Bank]]
| align="right" |   4 965.4
| align="right" |   4 774.8
| align="right" |   8 481.2
| align="right" |   6 949.8
|-----
| [[Golomt Bank]]
| align="right" |  96 608.7
| align="right" | 135 964.2
| align="right" | 184 906.9
| align="right" | 329 356.6
|-----
| [[Khan Bank]]
| align="right" |  81 074.6
| align="right" | 134 355.7
| align="right" | 238 986.5
| align="right" | 476 778.1
|-----
| [[Mongol Post Bank]]
| align="right" |  42 769.0
| align="right" |  62 072.3
| align="right" |  91 993.7
| align="right" | 161 432.9
|-----
| [[National Investment Bank]]
|   NA
| align="right" |     976.8
| align="right" |   7 562.2
| align="right" |  10 138.3
|-----
| [[Savings Bank]]
| align="right" |  21 131.7
| align="right" |  24 664.4
| align="right" |  29 755.6
| align="right" |  43 308.1
|-----
| [[Trade and Development Bank]]
| align="right" |  92 569.5
| align="right" | 148 617.5
| align="right" | 219 179.2
| align="right" | 349 705.9
|-----
| Transport Development Bank
| align="right" |   7 312.8
| align="right" |   4 794.6
| align="right" |   6 679.7
| align="right" |   6 631.8
|-----
| [[Ulaanbaatar City Bank]]
| align="right" |  13 021.6
| align="right" |  49 725.0
| align="right" |  66 113.3
| align="right" |  99 042.5
|-----
| [[XacBank]]
| align="right" |  20 313.6
| align="right" |  38 077.9
| align="right" |  59 813.0
| align="right" | 100 683.1
|-----
| [[Zoos Bank]]
| align="right" |  38 109.7
| align="right" |  62 034.4
| align="right" |  82 919.1
| align="right" | 146 127.2
|-----
| '''Total'''
| align="right" |  '''606 798.6'''
| align="right" | ''' 606 798.6'''
| align="right" |'''1 223 287.3'''
| align="right" |'''2 056 060.8'''
|}
''Source: 2007 Statistical Yearbook''

== Banks Operating in Mongolia ==

* [[Anod Bank]] 
* [[Bank of Mongolia]]
* [[Capital Bank]] 
* [[Capitron Bank]] 
* Chinggis Khaan Bank
* Credit Bank 
* [[Erel Bank]] 
* [[Golomt Bank]] 
* [[Khan Bank]]
* [[Mongol Post Bank]]
* [[National Investment Bank]]
* [[Savings Bank]]  
* [[Trade and Development Bank]] 
* Transport Development Bank
* [[Ulaanbaatar City Bank]] 
* [[XacBank]]
* [[Zoos Bank]]

== Further Reading ==

[http://mit.mit.pmis.gov.mn/en/download/laws/banking_law.pdf Banking Law of Mongolia]- published by the Ministry of Industry and Trade

== References ==

<references/>