Global microscope on the microfinance business environment 2012

29
awareness of consumer rights and resulted in the
creation of a Consumer Complaints Unit located
within BI. The unit does not cover MF clients. It deals
with complaints from consumers of commercial
banks and, to a much lesser extent, from rural banks.
Key changes and impacts since last year:
l There has been increased interest by foreign
investors to enter MF in Indonesia. The routes vary
from investment in private providers, such as Bank
Tabungan Pensiunan Nasional (BTPN),to
establishing venture capital fi rms. Untapped
demand for MF in Indonesia and the need of funds
investing in MFIs to diversify their portfolios away
from markets perceived to be mature or risky
(especially India) have been cited as reasons for
increased investor interest.
l In October 2011, parliament passed a long
pending bill to create a new fi nancial regulator—
the Financial Services Authority, to be known as
OJK (Otoritas Jasa Keuangan). BI has said that
responsibility for the supervision of commercial
banks will shift to a newly formed regulator by
end-2014.
l The regulatory and supervisory environment for
microfi nance remains in transition. Bank Indonesia
is mulling steps to improve the effi ciency of the
credit bureau, but concrete steps are not expected
before the formation of the new Financial Services
Authority. BI’s current priority is to include
positive credit information, a move opposed by
most commercial banks. In its current set-up the
credit bureau does not effectively discourage client
over-indebtedness. BI has developed draft
regulations for private credit bureaus, but there is
signifi cant political opposition to surrendering BI’s
monopoly on credit information to a private entity.
l The issuance of guidelines on branchless
banking and agents by BI is thought to be
imminent. The guidelines would provide a
framework for fi nancial transactions through
agents and allow fi nancial institutions to make
better use of existing technologies. They are also
expected to allow non-bank institutions to carry
out cash-in/cash out transactions.
© The Economist Intelligence Unit Limited 2012
<strong>Global</strong> <strong>microscope</strong> on the microfi nance business environment 2012
■ Mongolia
Key characteristics of the microfi nance business
environment:
l Commercial banks—most notably Khan Bank and
XacBank—are the main providers of microfi nance
products in Mongolia. Khan Bank, for instance,
maintains a lion’s share of the microfi nance market
with over 300,000 active borrowers. Smaller
microfi nance institutions such as Credit Mongol
have roughly 2,000 active borrowers.
l Dispute resolution does not appear to pose
signifi cant problems for customers or microfi nance
institutions. According to numerous experts,
Mongolian fi duciary laws are comprehensive and
civil courts are effective in addressing disputes
between MFIs and customers if or when they arise.
l Most microfi nance lending continues to occur
through traditional channels such as bank
branches and ATMs. Larger banks such as Khan
Bank and XacBank, however, are developing their
mobile banking technology services to better
enable clients to access fi nancial services from
anywhere in the country.
Key changes and impacts since last year:
l Little to nothing has changed in the past year
with regard to microfi nance in Mongolia. Mongolia
has become increasingly attractive for foreign
mining companies, which has subsequently led to
rising infl ation and growing criticism from citizens.
l ATMs and branches of both major and minor
MFIs continue to expand throughout the country,
although the majority of ATMs and branches are
located within the city centres.
l The Mongolian government remains resolute in
supporting the development of microfi nance as
major banks focus largely on medium and high net
worth individuals and mining companies. A fund of
US$25m supports small and medium-sized
enterprises in Mongolia that may have diffi culty
obtaining fi nancing from the prominent banking
institutions.