Not long ago Mongolbank increased its interest rate from 9.75 to 14% and it was widely critisized by public and economists. But yesterday, Board of Directors of Mongolbank held a meeting and made decision to decrease its rate by 1.25%, down to 12.75%.
After this decision, Mongolbank decreased its loan rate to commercial banks by 1.25%. Mr. L.Purevdorj, President of the Mongolbank, informed as follows:
“… inflation is decreasing steadily. Inflation rate was 23% at the beginning of this year and it is decreased by 12.5% at the end of April if compares it same period of the last year and by 5% since the beginning of this year. Also currency exchange rate is becoming stable. It is around 1420-1430 in recent days and it was the result of our measures to hold Mongolbank’s rate at the same level of Naiman Sharga and interbank exchange rate.
In the next round, we will pursue policy to decrease the interest rate and support the economy. The previous action was necessary measure in relation to the economy recession. Our economy is not growing, but falling. Therefore, this measure to decrease the rate was to decelerate the fall and signal to the commercial banks to release more loans. It sounds a little, but it will lead further decrease if the steadiness in the economy continues.”
Mongolbank is constantly put requirements to combanks to merge with each other, increase their capital and raise fund from abroad. Mongolbank has policy to decrease the number of banks, because of their poor capacity to handle the crisis and downturn and rigorous competition for the deposit that leads increase in loan interest rate. It alos started to develop plan to make banking sector more healthy and capable.