Mongolia : Micro, Small, and Medium-Sized Enterprises Financing Project

Nonsovereign Project | 53090-001

A proposed loan of up to $60,000,000 (or its equivalent in togrog), comprising (i) a senior unsecured A loan of up to $30,000,000 (or its equivalent in togrog), and (ii) a senior unsecured B loan of up to $30,000,000 for the Micro, Small, and Medium-Sized Enterprises Financing Project in Mongolia

Project Details

  • Project Officer
    Arshad, Basit
    Private Sector Operations Department
    Request for information
  • Approval Date
    9 October 2019
  • Country/Economy
    Mongolia
  • Sector
    • Finance
Project Name Micro, Small, and Medium-Sized Enterprises Financing Project
Project Number 53090-001
Borrower / Company XACBANK LLC
Country / Economy Mongolia
Location Nation-wide
Type or Modality of Assistance
3838 Loan Ordinary capital resources USD 30.00 million Committed
CF87 B-Loan Other USD 30.00 million Approved
Strategic Agendas Inclusive economic growth
Drivers of Change Private sector development
Sector / Subsector

Finance / Small and medium enterprise finance and leasing
Gender Gender equity
Responsible ADB Department Private Sector Operations Department
Responsible ADB Division Private Sector Financial Institutions Division
Responsible ADB Officer Arshad, Basit
Project Sponsor(s)
Description A proposed loan of up to $60,000,000 (or its equivalent in togrog), comprising (i) a senior unsecured A loan of up to $30,000,000 (or its equivalent in togrog), and (ii) a senior unsecured B loan of up to $30,000,000 for the Micro, Small, and Medium-Sized Enterprises Financing Project in Mongolia
Objectives and Scope The project entails the Asian Development Bank (ADB) providing long-term financing to XacBank to support its lending operations to micro, small, and medium-sized enterprises (MSMEs) in Mongolia. By improving access to finance, the project will support the expansion of MSMEs and diversification of the economy, which will in turn contribute to employment and poverty reduction.
Status of Development Objectives Evaluation of development objectives is ongoing.
Status of Operation/Construction XacBank continues to operate as a bank in Mongolia, providing financial services to MSMEs.
Linkage to Country/Regional Strategy The transaction supports two priorities of Strategy 2030: (i) addressing remaining poverty and reducing inequalities, and (ii) accelerating progress in gender equality. Strategy 2030 highlights ADB's supports for SMEs and inclusive businesses to help generate quality jobs and support inclusive growth. It emphasizes ADB's support to the finance sector by helping to develop financial infrastructure, institutions, and products and services. The project is consistent with ADB's country partnership strategy, 2017-2020 for Mongolia. Under the pillar of promoting economic and social stability, ADB will promote labor-intensive growth outside the mining sector through SME development by improving their access to finance and by establishing credit lines for key financial institutions. The proposed project will improve MSMEs' access to finance by providing much-needed long-term finance to a local bank. It will also help to tackle the persistent gender gap in the country and is thus aligned with ADB's Gender Equality and Women's Empowerment Operational Plan, 20132020. It is consistent with ADB sovereign operations supporting MSME development in Mongolia, including credit guarantees.
Safeguard Categories
Environment FI-C
Involuntary Resettlement FI-C
Indigenous Peoples FI-C
Summary of Environmental and Social Aspects
Environmental Aspects

XacBank's current and likely future MSME portfolio are likely to have minimal or no adverse environmental impacts. MSME clients involved in the mining sector are raw material or service suppliers rather than small mining companies. Climate change impact from the project is expected to be low due to the nature and scale of MSME sub-loans that may be financed by ADB loan proceeds.

XacBank implemented a social and environmental management system (SEMS) which guides XacBank's environmentally sound and sustainable development principles and ensures that its MSME finance operations comply with national laws and regulations of Mongolia. Its SEMS is in line with ADB's Safeguard Policy Statement.
Involuntary Resettlement No land acquisition, physical, or economic displacement is foreseen in relation to any activities of the sub-borrowers.
Indigenous Peoples No impact on indigenous peoples' communities is foreseen in relation to any activities of the sub-borrowers.
Stakeholder Communication, Participation, and Consultation XacBank provides sub-loans to MSMEs, which are mostly in the service and trade sectors such as small tourist camp operators, bakery shops, and individual traders. Sub-loans to MSMEs in the manufacturing sector are usually for working capital or purchase of equipment._XacBank ensures its and its sub-borrowers compliance with national labor laws and, pursuant to ADB's Social Protection Strategy, takes measures to comply with internationally recognized core labor standards. As part of the loan application process, XacBank evaluates performance of its sub-borrowers on occupational safety, proper working conditions, provision of mandatory compensation and benefits, and protection of worker's rights.
Timetable for assistance design, processing and implementation
Concept Clearance 26 Mar 2019
Credit Committee Meeting 19 Aug 2019
Approval 09 Oct 2019
Last PDS Update 23 Sep 2022

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

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Title Document Type Document Date
Micro, Small, and Medium-Sized Enterprises Financing Project: Report and Recommendation of the President Reports and Recommendations of the President Sep 2019
Micro, Small, and Medium-Sized Enterprises Financing Project: Initial Poverty and Social Analysis Initial Poverty and Social Analysis Jul 2019

Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.

The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

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