AIIB launches Mongolia private-sector financing with USD130 million green loan to Khan Bank

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AIIB Mongolia green loan

Highlights

AIIB launched its first private-sector financing in Mongolia with a USD130 million five-year senior unsecured green loan to Khan Bank JSC.
AIIB provided USD80 million, Korea Development Bank added USD20 million, and Asian B-loan participants contributed USD30 million, with drawdowns available in both U.S. dollars and Mongolian tugrik.
The funding targets renewable energy, energy efficiency, and green infrastructure projects, supporting Mongolia's goal to cut greenhouse gas emissions by 30.3% by 2035.

Loan structure and green financing scope

As reported by AIIB, the bank has signed a five-year senior unsecured green loan with Khan Bank JSC, marking its first nonsovereign-backed financing in Mongolia and its first investment in a financial institution in the member.

AIIB acted as lead arranger and provided USD80 million. Korea Development Bank added USD20 million as a parallel lender, while B-loan participants from Asia committed a combined USD30 million, bringing additional mobilized financing to USD50 million. The transaction also uses a dual-currency structure, allowing drawdowns in both U.S. dollars and Mongolian tugrik.

The proceeds are being channeled through Khan Bank, Mongolia's largest commercial bank, to finance eligible projects in renewable energy, energy efficiency, green buildings, pollution prevention and control, water management and treatment, and clean transport.

Climate strategy and market impact in Mongolia

Khan Bank's nationwide network and sustainable finance experience are expected to help extend climate-aligned lending across Mongolia, where access to long-term green funding remains limited. The investment also deepens AIIB's engagement with the country's private sector while supporting the bank's priorities in green infrastructure and private capital mobilization.

AIIB Chief Investment Officer 1 Kim-See Lim says green finance remains a critical agenda for the coming decade because it can address climate change and economic inequality while supporting prosperity. Khan Bank Chief Executive Officer Munkhtuya Rentsenbat says Mongolia is among the 10 countries most vulnerable to climate change and that the financial sector has a key role in helping the country meet its target of reducing greenhouse gas emissions by 30.3% by 2035.

The financing also aligns with Mongolia's commitments under the Paris Agreement, as well as the country's Vision 2050 Strategy and Green Development Policy.

Pakistan’s push to expand bank lending to priority sectors was previously covered in our article, focusing on government targets to raise credit for housing, agriculture, and SMEs by June 2027. We noted that banks were urged to speed up loan processing and simplify requirements, while planned reforms such as risk-sharing arrangements, updated SME regulations, and public-private partnerships were positioned to remove structural barriers to wider credit access.

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