FCR: Maximum Interest Rate for Lending to Be 4.5 Percent

Ulaanbaatar /MONTSAME/. The Money Loan Activities Policy Council under the Financial Regulatory Commission (FRC) held a meeting and set the maximum interest rate for money lending to be 4.5 percent monthly.

The Financial Regulatory Commission reported that the maximum interest rate, the general formats of loan, pledge, and guarantee agreements, and the methodology for calculating the interest rates, approved by the Money Loan Activities Policy Council will be followed from March 1, 2024.

The fact that countries set the upper limit of loan interest rates and make detailed regulations by passing laws to prevent consumers from being burdened with excessive interest payments and debt, improve access to credit services, create financial stability, and increase economic productivity.

Regulatory transparency empowers consumers to make more informed decisions and has positive economic impacts. In Mongolia, pawnbroking had not been regulated and violated the rights of consumers with high interest rates and improper calculation of penalties on arrears. Therefore, in 2022, the State Great Khural approved the Law on Regulation of Money Loan Activities.

Translated by Sainzaya Davaajamts