Ulaanbaatar
Fintech lending debt-to-income ratio regulated to be 70 percent
Economy
Ulaanbaatar /MONTSAME/. Technology-based loaning or Fintech lending
rose 40 percent, and fintech borrowers accounted for 88.8 percent of the 1.6
million Non-bank Financial Intuitions (NBFI) borrowers.
Specifically, the
total assets of NBFI reached MNT 3.4 trillion, and the number of customers
doubled to 4.9 million. 92.2 percent of them are fintech loan customers.
According to the Financial Regulatory Commission, 522 Non-bank
Financial Intuitions operate nationwide.
Demand for NBFI loans
has increased intensely since last August. Based on all the previously
mentioned issues, the FRC discussed the debt-to-income ratio for fintech loan
products provided by NBFI and limited the amount of monthly interest and
principal payments to no more than 70 percent (compared to monthly after-tax
income). However, this is more of a regulation than a restriction, noted B.
Itgelsuren, the head of the Department of Non-banking Financial Services of the
FRC.
MNT 237.5 thousand be allotted per Fintech borrower.
The above decision
will be implemented from the first day of next year and applied to 36 NBFIs. In
particular, the above number of NBFIs are engaged in fintech lending services.
Fintech lending has
the advantage of providing low-value consumer loans to citizens regardless of
location, but it is emphasized that if this type of the loan becomes widespread,
there is a risk of putting people under a debt burden.
Therefore, to prevent
this, the SRC has decided to regulate the granting of loans by considering the
borrower's debt-to-income ratio not exceeding 70 percent in the lending
activities of 36 NBFIs.
