Afghanistan’s Central Bank Publishes Key Banking Regulation

The Da Afghanistan Bank (DAB), the central bank of Afghanistan, has published a significant banking regulation that outlines the country’s banking licensing and supervision framework. This new regulation is aimed at promoting a stable and efficient banking system in Afghanistan.

Transparency and Cooperation

According to Article 1 of the regulation, DAB will publish an annual review of the differences between its regulations and those of foreign banks operating in Afghanistan. This move is expected to promote transparency and cooperation between local and international financial institutions.

Foreign Interest in Domestic Banking Activities

The regulation outlines the treatment of foreign interest in domestic banking activities, allowing non-resident banks and bank holding companies to establish subsidiaries and branch offices in Afghanistan subject to certain conditions. DAB will closely cooperate with foreign regulators to ensure timely information exchange and supervisory responsibilities.

Immunity from Suit

In a significant move, the regulation grants immunity from suit for individuals who act in good faith while performing their duties under the law. This provision is aimed at attracting international expertise and talent to Afghanistan’s banking sector.

Licensing and Permit Procedures

The regulation outlines the procedures for obtaining banking licenses and permits, including:

• Submission of applications
• Financial background checks
• Payment of fees
• DAB has been authorized to carry out financial, criminal, personal, and professional background checks on bank owners and administrators

Two-Stage Application Process

In a unique provision, the regulation allows companies that are not yet established to apply for a banking license in two stages:

1. Preliminary application stage
2. Final application stage after the company is established and registered DAB may require additional documentary evidence during the application process.

Conclusion

The publication of this regulation marks an important step towards promoting financial stability and economic growth in Afghanistan. It demonstrates DAB’s commitment to transparency, cooperation, and good governance in the country’s banking sector.