By providing small loans to individuals who typically lack access to loans from formal financial institutions, microfinance programs can invest in productive or income-generating activities.

Microcredit for business purposes gives opportunities for low-income individuals to start their own businesses, which contributes to poverty alleviation, decreases income inequality, and increases household income to enable necessary spending on health and education.

Potential reduction in exploitation of MSMEs by informal sources of credit that charge higher rates of interest.

A potential cyber attack can impact the economy adversely with leakage of private customer information and confidential financial data. Banks may perceive lower demand for their traditional financing products due to the availability of products offered by NBFIs.

Abuse of the system and lack of loan repayment. Potentially low loan repayment rates - due to lack of recorded credit history - may result in high-interest rates.

Gender inequality and/or marginalization risk: Considerable investment required for improving financial literacy.

Low financial literacy, limited internet connectivity and low digital literacy might limit the efficacy of services offered. If the borrowers' potential to repay microcredit and monitoring of investment plans are not carefully considered, borrowers' financial burden may get aggravated.

Consumers may be dragged into a debt-trap, using new loans to repay old ones. Low-income borrowers have a high default risk that can affect the sustainability of a micro-credit operation.

Gender inequality and/or marginalization risk: If consumer protection measures are not adequately implemented there is a risk of negative outcomes impacting social and financial resilience of consumers, especially from low income households.

Increase financial inclusion and provide affordable and accessible financial services through fintech NBFIs to unbanked populations and businesses.

Mongolia's 5-Year Development Guideline 2021-2025 and Action plan includes plans to increase the income of the population and reduce poverty by improving financial inclusiveness and providing affordable financing solutions.

National Program on Improving Financial Inclusiveness includes objectives to develop micro-lending institutions, improve the financial literacy of the population as well as promote new technologies in the financial industry.

The Law on electronic signature, the Government's Digital Nation Policy Document and E-Mongolia Initiative aim to accelerate the development of the technology industry.

Fiscal incentives: The Law on Corporate Income Tax: A tax credit of 90 percent is available to a taxpayer whose revenue is less than USD450 mn and operates in industries other than mining, petroleum, alcoholic beverage, and tobacco.

Mongolia does not have significant entry or exit barriers for businesses, and the economy is highly open to foreign trade and investment, except for investment by foreign government-owned legal entities under the Investment Law.

NBFIs are required to get a license from Financial Regulatory Commission of Mongolia.

According to the Law on Investment, the banking and financial sector is considered a strategic sector which will require to get permission from the authority if any foreign state-owned investor seeks to invest more than 33 percent of the total outstanding shares for the company.

Companies: LendMN NBFI JSC, Invescore NBFI JSC, Numur Credit NBFI LLC, Sendly NBFI JSC Investor: Rhinos Asset Management of Korea

Ministry of Finance, the Central Bank of Mongolia, Financial Regulatory Commission, Ministry of Digital Development and Communication,

European Bank for Reconstruction and Development, International Finance Corporation, Asian Development Bank

Mongolian Fintech Association, Mongolian Sustainable Finance Association, Mongolian Bankers Association.