H.E. Governor Delawari, Da Afghanistan Bank

The Embassy was able to have an interview with H.E. Governor Noorullah Delawari of Da Afghanistan Bank. Positive progress has been steadily continuing in Afghanistan’s financial sector. H.E. the Governor provides examples of developments and how the much-talked about problems with Kabul Bank were handled without damage to anyone as well as how confidence has been restored. The transcript of the interview follows.

Please share some of the developments happening in Afghanistan’s banking.

We had a setback with the result of the failure of the Kabul Bank that shows that we have since, at least since last year, we have started recovering both in terms of deposits and customers and re-establishment of faith in the banking system in the country. So we have got back on our feet as far as the banking system is concerned.

We have made a number of changes in the law to close some loopholes that were problematic, based on the lesson learned from Kabul Bank. We have made some structural changes in the banking system including the law.

What has happened in the banking system has been amazing. How is the banking sector’s penetration outside of Kabul?

We have 220 full branch banks across the country. We have a number of limited services offered, including ATM machines in Kabul and some other commercial centers.

The very latest development is mobile payment, where we have already licensed one bank - one mobile operator - Roshan, which is fully operating. Through that one can transfer money by telephone in a few minutes to most parts of the country. We have three other mobile operators which have applied: MTN, Etisalat and a of the government operators belonging to the Ministry of Communications. So, three operators are in the process of obtaining licenses. The Central Bank has introduced regulations governing licensing and as well as monitoring of these operators. So we are expecting this will enable Afghanistan to maximize access to most parts of the country. Today, less than 3% of the Afghan population has access to banks. Through this medium, we can expand that to all parts of the country. Perhaps over 50% of the population will have access to finance. Mobile banking is not only to transfer money but to do most services across the country. People could pay their bills, could receive their salaries, people could pay fees relating to all sorts of life – which is common in the provinces. When you have a transfer of property, you pay fees; when you obtain a passport to travel, you have fees … all of these could be handled by mobile money.

How is the coverage so far?

We have quite a few people. Roshan has over 30,000 accounts established throughout the country. We have now new ideas – new ways of paying and receiving money has been established.

Can you provide more details on how confidence is being restored after the problems with Kabul Bank?

Kabul Bank was the first test. Nobody lost any money. We didn’t have at that point insurance, but the government recognized the importance of bank services and guaranteed payments and whoever wanted to get his/her cash went to Kabul Bank and was fully paid. So nobody lost money. However, there were matters which caused the bank to collapse – and this was a matter of importance to the international community. It indicated certain areas like fraud committed by people. Two international organizations came and they were hired to provide help. One was Kroll of Britain. It came and did work on Kabul Bank and the second largest bank, Azizi Bank. It provided very valuable information and guidance throughout.

How is the Central Bank working with the government to ensure there will be no negative financial repercussions after the withdrawal of international forces and the funds that they inject?

There will be no problems resulting from this.