Explanation:

- The Union Cabinet's approval for SEBI to sign a bilateral Memorandum of Understanding (MoU) is a step towards enhancing regulatory cooperation.

- Option 1: Mongolia - This is the correct option. The MoU aims to strengthen the partnership between SEBI and the Mongolian Financial Regulatory Commission.

- Option 2: Mauritius - Although SEBI has existing relations with regulatory bodies in Mauritius, it is not the subject of this recent MoU.

- Option 3: Madagascar - There is no recent development involving SEBI signing an MoU with Madagascar’s financial regulator.

- Option 4: China - India and China have separate regulatory frameworks with limited bilateral MoUs in the financial regulatory space.

- Option 5: Bangladesh - While SEBI has engaged in dialogues with Bangladesh, this is not related to the current MoU in question.