The State of Afghanistan’s Banking System

BANKING SECTOR IN AFGHANISTAN

8TH ANNUAL US AFGHANISTAN BUSINESS MATCHMAKING CONFERENCE

WASHINGTON DC., DEC 2-4, 2012

Da Afghanistan Bank (Central Ban of Afghanistan)1

Banking Sector in Afghanistan Building a robust and stable financial system is one of

the critical goals of Da Afghanistan Bank (DAB)

DAB has improved its supervisory procedures. In order to further strengthen the financial sector

DAB has taken necessary steps toward improving its regulatory framework.

The main achievements in this regard are: Approval of the amendments in Banking Law by the

Parliament; Approval of the final draft of the Islamic Banking law by the

DAB Supreme Council and submitting it to Ministry of Justice Approval of the ADIC draft law by DAB Supreme Council and

submitting it to the Ministry of Justice for further process. The DAB Supreme Council also approved amendments to

the money services regulation.

Banking Sector in Afghanistan The banking sector accounting for 24.2 percent

of GDP The banking sector in Afghanistan has

witnessed visible improvement in size, structure, outreach and financial health during 2005 and 2011.

Total assets of the banking system at the end of third quarter of 1390 (Dec. 20, 2011) increased by 2.5 percent, standing at AF197.17 billion (USD4.01 billion) compared to the same period of last year.

Banking Sector Performance

Banking Sector Performance

Size of Afghanistan Banking Sector

Exchange Rate of AF against USD The nominal exchange rate of Afghani

against US dollar depreciated at the beginning of current year (1391) and continued its downward trend throughout the next months.

Afghani depreciated by 5.38 percent from AF 49.40 per USD on March 21 to AF 52.06 on Sep 29, 2012, due to exogenous factors.

Nominal Exchange Rate of AF against USD

Monetary instruments Foreign Exchange Auction: The

foreign exchange auction is the primarily tool currently used by monetary policy to control the growth of money supply.

Capital Notes (CNs) Capital Note is the other instrument used

by Da Afghanistan Bank to manage liquidity in the local financial market.

Thank You!