Development Bank of Mongolia gave an update on non-performing loans of the bank last Friday.

CEO of Development Bank N.Manduul informed that as of February 24, about 50 billion MNT had been repaid to the bank. Over the past month, the bank has been assessing and monitoring its non-performing loans. This work is about 75 percent complete, he said.

A total of 195 real estate buildings of non-performing borrowers were sealed, including 44 service facilities worth 52.4 billion MNT, seven factories worth 1.9 billion MNT, 46 apartments worth 32 billion MNT, 82 plots of land worth 26.6 billion MNT, four cellars worth 2.3 billion MNT, three unfinished buildings worth 656 million MNT, seven farms buildings worth 228 million MNT and six garages worth 564 million MNT.

Three companies are being monitored by the police. Other cases related to the bank are being investigated by the Independent Authority Against Corruption (IAAC). Minister of Justice and Internal Affairs Kh.Nyambaatar promised to complete this work soon.

Deputy CEO of the bank J.Erkhembaatar noted that the primary court is reviewing 16 cases related to non-performing loans. One case is pending at the appellate court and six cases at the supervisory court. In specific, Development Bank has filed lawsuits worth 750 billion MNT against 16 companies that failed to repay their loans on time. The identities of another 17 borrowers with non-performing loans worth 1.6 trillion MNT were disclosed earlier this month.

The longest-running case involving Mongol Drain Milk LLC has been unresolved for 886 days at the Sukhbaatar District Civil Court. In addition, the Khan-Uul District Court hearings related to Erel Company’s lawsuit have been postponed several times, J.Erkhembaatar underscored.

The bank representative continued, “Loan holders say they have built a large factory that will make a valuable contribution to Mongolia’s prosperity. But this is a private business. Only the companies are benefiting. They complain that they set up a factory for Mongolia but Development Bank has confiscated it and is attempting to shut it down. However, borrowers did not pay the principal and interest for 1,000 to 1,200 days. Therefore, this issue cannot be resolved by means of mutual agreement between the borrower and lender.”

“For instance, Credos Company has already received a loan from the bank to build a protein plant. It is said that a small equipped factory was built in a detached house at a cost of more than 20 billion MNT. However, it is estimated that it was built at a cost of about 6 billion MNT. The company invested the rest of the money in a jewelry business and bought an expensive car. After spending the loan money in this unethical manner and using it for a different purpose, some borrowers are giving various excuses, such as blaming impacts of the COVID-19 pandemic,” the J.Erkhembaatar stressed.

Moreover, borrowers are asking the bank to release confiscated properties so that they can sell their collateral and repay their loans. Development Bank is open to such proposals, CEO of Development Bank N.Manduul said.

Prime Minister L.Oyun-Erdene instructed the relevant officials to completely change members of the Board of Directors of Development Bank. In connection with this, the bank has decided to dismiss more than 20 officials who may have been irresponsible in their work and been influenced by borrowers with non-performing loans.

Former directors of Development Bank N.Munkhbat and B.Batbayar, deputy directors N.Munkhbayar and B.Choijiljalbuu, and director of Altai Construction Kh.Bat-Erdene have been detained by law enforcement bodies.