Editor in Chief: Moh. Reza Huwaida Thursday, March 28th, 2024

SIGAR Warns of Looming Banking Crisis in Afghanistan

SIGAR Warns of  Looming Banking Crisis in Afghanistan

KABUL - In a recent report, the U.S. Special Inspector General for Afghanistan Reconstruction (SIGAR) discusses instability in the banking system in Afghanistan and said that the Central Bank of Afghanistan cannot provide adequate oversight.

SIGAR highlights flaws of Afghan banks in the areas of administration, accounting, loan analysis and implementation of law. The report warns that if these problems are not solved, Afghanistan could face a dangerous banking crisis soon.

The head of the Central Bank rejected the report and said that SIGAR is making the accusations without any information from the Central Bank.

Noorullah Delawari, the head of the Central Bank, argued that after the high-profile bankrupting of Kabul Bank, there have been significant changes in the supervision system and people's deposits in commercial banks have doubled.

"People's deposits have doubled in Afghan banks after the bankruptcy of Kabul Bank, which shows that trust in banks has increased in Afghanistan," Delawari said.

Khalil Sediq, the head of Afghanistan Banks Union, recognized there were shortcomings and problems in the commercial banks, but said that currently there are no signs of a looming crisis.

"There might be shortcomings and problems in different parts of banking sectors, but these problems are not that important to result in the bankruptcy of banks," Sediq said. "The banking system is new in Afghanistan and our banks need experts and their experience."

SIGAR report adds that after foreign advisors were prevented from working in Afghan banks by President Hamid Karzai, these banks have missed important advise and technical support.

However, Delawari maintained that the reason for the revocation of work permits for foreign advisors at the banks was due to their supposed carelessness on the job. (Tolo News)