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Afghanistan International Bank Under Scrutiny for Related Party Transactions

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Kabul, Afghanistan - The Afghanistan International Bank (AIB) has come under scrutiny for its handling of related party transactions, according to a recent report by the bank’s supervisory authorities.

Concerns Revealed

The report highlights several concerns regarding the bank’s classification and reporting of standard, doubtful, and loss-making assets. Specifically, it notes that:

  • The bank has failed to properly identify and categorize assets that do not generate a consistent and regular income or benefit for the institution.
  • The bank has extended repayment terms to clients with unfavorable financial conditions, which may have led to an increase in doubtful and loss-making assets.
  • The bank’s reporting on related party transactions has been inconsistent, making it difficult to determine the true extent of these transactions.

AIB’s related party transaction policy requires the bank to maintain records of all forms received from shareholders, directors, and key management personnel. However, the report reveals that:

  • The bank has failed to properly maintain these records, making it difficult to track related party transactions.
  • There are concerns regarding the bank’s reporting on related party credits, including a lack of transparency in disclosing the outstanding amounts and maturity dates of these credits.

AIB’s Response

In response to the report, AIB’s Chief Risk Officer (CRO) has assured that:

  • The bank is taking immediate action to address the concerns raised.
  • A more robust system for identifying and classifying related party transactions will be implemented.
  • Regular updates on progress in addressing these issues will be provided to the Audit Committee and Board of Directors.

Consequences of Non-Compliance

Failure to comply with AIB’s related party transaction policy and regulations may result in severe consequences, including:

  • Fines and penalties
  • Regulatory action

In conclusion, the recent report by the supervisory authorities highlights several concerns regarding AIB’s handling of related party transactions. The bank must take immediate action to address these issues and ensure compliance with its policy and regulations.