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In 2001, XacBank (pronounced ‘hahs-bank’) was created from a merger between two of the largest non-bank financial institutions in Mongolia: X.A.C. (an acronym for “Golden Fund for Development) and Goviin Ekhlel (Mongolian for “Gobi Start”).
Both organizations have strong roots, with X.A.C. founded as part of the UNDP’s MicroStart Mongolia project, and Goviin Ekhel established by Mercy Corps as part of USAID’s Gobi Initiatives project.
Today, XacBank serves about 21,000 microfinance clients through 98 branches in all 21 of Mongolia’s provinces -- making it the country’s largest microfinance institution. And the organization’s successful transition from development project to socially-driven commercial bank has made it a model in microfinance circles.
The bank’s dynamic approach has allowed it to maintain profitability and thrive in Mongolia’s increasingly competitive financial services market.
Eco-banking and green loans
According to a recent study by the World Health Organization, Mongolia is the most polluted country on earth, registering particulates at 14 times the WHO’s standard threat level. Accordingly, Kiva and XacBank have joined forces to offer green loans that finance environmentally-friendly businesses and activities, including organic farming, solar panel purchases, and energy-efficient home renovations.
Some of these green loans are administered by XacBank’s new Eco-banking Department. So far, this division has helped distribute over 60,000 energy-efficient stoves, over 17,000 insulated ger coverings for traditional felt homes, and over 4,000 insulated vestibules that lock in heat and expand the usable space inside these homes.
More than 107,000 families in the five districts surrounding the nation’s capital, Ulaanbaatar, have benefited from this initiative. Together, these environmentally-minded products are estimated to slash coal consumption by 157,000 tons and save households about $2.6 million in heating costs in 2012 alone. XacBank’s work is also estimated to reduce emissions of particulate matter from household stoves by up to 25% in 2012, preventing 450,000 tons of greenhouse gases from being released into the atmosphere.
The bank is working with financial partners to receive accreditation for these greenhouse gas reductions. Under the Kyoto Protocol, this would allow the bank to generate income by selling carbon dioxide offsets on international markets. It plans to reinvest these profits in its clean energy program to expand access to environmentally-friendly products for low-income and marginalized communities.
XacBank also offers loans targeting people who are just starting or trying to restart a business. Intensive training is provided alongside financing to help borrowers better understand their finances and how to operate small businesses. The bank also partners with ADRA, Mercy Corps and other business incubators to give riskier borrowers access to more financial tools and resources.
Awards and honors
XacBank received these honors for its work in 2011:
The Microfinance Institution Strategy Competition Winner from the 9th annual Women’s World Banking Microfinance and Capital Markets Conference; Organization with Higher Social Responsibility from the Mongolia Management Association; Best Socially Responsible Enterprise from the Mongolian National Chamber of Commerce and Industry; 5 out of 7 Kiva Social Performance badges for Anti-Poverty Focus, Family and Community Empowerment, Entrepreneurial Support, Facilitation of Savings and Innovation.
XacBank’s vision is to become the bank preferred by clients in all customer segments by providing comprehensive, value-adding financial services, and applying top business processes while maintaining its leadership in the microfinance industry.
XacBank’s core values describe how it pursues this vision. They guide the behavior of all employees: Customer centric operations; creativity and fair remuneration; teamwork; respect and responsibility; corporate social responsibility.
XacBank and Kiva
When a non-delinquent borrower has paid back their Kiva loan, 9% of the interest they paid is returned to them and placed in a savings account to facilitate future savings.
Today, about 90% of the loans XacBank posts to Kiva are for green purposes, higher education or higher risk start-up businesses. The bank continues to extend its reach into lower-income areas and design financial tools to end poverty, combat pollution and expand access to education.
You can make a loan to a XacBank borrower here. Or join the XacBank lending team on Kiva to learn more and receive updates.