MONEY CREDIT SERVICE AUTHORIZED BUSINESS UNITS START JOINT INSPECTION

The Financial Regulatory Commission, in cooperation with the Metropolitan Police Directorate, conducted an inspection of entities engaged in mortgage lending activities in the territory of the 7th Khoro of Bayanzurkh District on the 21st and 22nd of this month in order to monitor the implementation of the Law on the Regulation of Money Lending Activities. A total of 33 entities participated in the inspection, and 19 entities were found to be engaged in money lending activities without registering with the relevant organization.

According to the Law on the Regulation of Money Lending Activities, legal entities engaged in money lending activities under the mortgage lending procedure and individuals engaged in money lending activities on a regular basis and for profit are obliged to register with the Governor of the relevant aimag or district and the Financial Regulatory Commission, depending on the amount of cash and the location of the activity. The law also prohibits the calculation of interest or penalties, and in case of overdue payments, the interest rate on loans is calculated at 20 percent, similar to banks and financial institutions. This is a legal protection that has stopped the practice of charging a daily penalty of 0.5 percent in case of overdue payments before the law was passed.

The Monetary Policy Council of the Financial Regulatory Commission has set the maximum interest rate for loans issued by entities engaged in monetary lending activities at 4.5 percent per month, and this decision will be implemented from March 31, 2025.

The joint inspection revealed common violations, such as granting loans at an interest rate higher than the interest rate approved by the Monetary Policy Council, charging additional fees and commissions, not registering a change of address with a competent authority, and opening and operating an unregistered branch. Investigation and resolution of violations are underway against the violators.

As of today, a total of 516 entities have registered as monetary lending operators in Mongolia, of which 348 are legal entities and 167 are registered as individuals engaged in monetary lending activities, and are engaged in monetary lending services aimed at citizens.

The joint inspection of the Financial Regulatory Commission and the Metropolitan Police Directorate will continue throughout the year. The inspection will continue to ensure the implementation of the law in the activities of citizens and businesses engaged in money lending services in the capital, districts, and aimags, to promote the law to citizens receiving money lending services, and to protect the rights of citizens.

Source: www.frc.mn