Thursday, July 3, 2014

ADB to Help Mongolia's Small Businesses Access Bank Financing

MANILA, Philippines, July 1 -- The Asian Development Bank issued the following news release:

The Asian Development Bank (ADB) is helping Mongolia's micro-, small- and medium-sized enterprises (MSME) get better access to bank financing from one of its biggest banks, through a $40 million loan approved today.

The loan will be used to expand the MSME portfolio of Khan Bank to 35% of its total loans by 2020 from 26% in 2013.

"Access to credit remains one of the most critical obstacles to the development of the MSME sector in Mongolia," said Monisha Hermans, an ADB Investment Specialist. "ADB will help address this gap by making available at Khan Bank more loans and longer repayment terms."

MSMEs comprise 98% of all enterprises in Mongolia, with three quarters of them considered as microenterprises. It is estimated that only 10% of them regularly access financing through banks, as many banks are focusing their operations on top-tier and larger companies which are perceived to be less risky.

The growth of MSMEs is critical to Mongolia as the economy needs to move away from its heavy reliance on the mineral resource sector and develop other growth industries.

Khan Bank, established in 1991, is Mongolia's largest bank in terms of total assets, loans and deposits. It has a strategic focus on the underserved MSME segment by offering products such as working capital, trade finance, and capital expenditure financing through electronic and mobile banking. It also has the largest branch network in the rural areas.

Khan Bank is the second Mongolian bank to receive such a loan from ADB. In December 2013, ADB provided a $30 million loan to XacBank for MSME relending.

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