Sub-Sector Review of Legal Environment of Microfinance in Mongolia

This document reviews the legal environment of the microfinance sub-sector in Mongolia. The document aims to:

• Provide information to the banking and financial sectors on the laws and regulations that would protect them against risk;
• Emphasize the legal issues, obstacles and challenges directly affecting the customers of microfinance;
• Ensure that the authorities authorized to deliver microfinance services offer products and services suitable to the needs of customers thus ensuring that:
  • The microfinance sub-sector is sustainable in the long run,
  • Customers using microfinance services obtain information on legal issues and take steps towards protecting their interests,
  • Law makers and the state administrative implementing agencies protect the rights of the poor and micro and small businesses.
• Compare international practice with Mongolias regulation.

The review divides the participants of the legal relations of the microfinance sub-sector in Mongolia into:

• Microfinance providers (formal and informal);
• Demand side of microfinance;
• Microfinance regulators and/or supervisors;
• Indirect participants.

The review covers the following topics:

• Regulation for obtaining a license and its revocation;
• Supervisory rules and regulations;
• Taxation rules;
• Non-governmental organizations;
• Pawn shops;
• Activities of project units and special purpose funds;
• Individuals;
• Consumer protection;
• Land market and collateral regulation;
• Court decision enforcement and state property registration operation.