CENTRAL BANK OF AFGHANISTAN RETRACTS RESOLUTION ON ISLAMIC BANKING GUIDELINES

Surprise Move by Central Bank of Afghanistan

Kabul, Afghanistan - In a surprise announcement, the Central Bank of Afghanistan (CBA) has decided to retract its resolution on Islamic banking guidelines if overruled by the Shariah Supervisory Board (SSB).

Background on the Resolution

The resolution was issued in September 2022 and outlined guidelines for outsourcing Islamic banking operations, rebates (Ibra’), and product development. It also established procedures for on-site and off-site supervision of Islamic banks.

CBA’s Decision to Retract the Resolution

In a statement released today, the CBA stated that it would retract the resolution if the SSB determines that any part of it is contrary to Shariah principles. The decision was made to ensure that the bank’s regulations are consistent with the principles of Islamic finance.

“This decision has been taken in order to ensure that our regulations are consistent with the principles of Islamic finance,” said a spokesperson for the CBA. “We believe that the SSB’s oversight is crucial in ensuring the integrity and credibility of our Islamic banking system.”

Industry Reaction

The move has come as a surprise to many in the industry, who had welcomed the guidelines as a major step forward in the development of Islamic finance in Afghanistan. Mohammad Khalid, CEO of Afghan Islamic Bank, appreciated the CBA’s commitment to upholding Shariah principles and expressed his enthusiasm for working closely with them to develop products and services.

Role of Shariah Supervisory Board

The SSB has been instrumental in reviewing and approving Islamic banking products and services in Afghanistan. Its oversight is seen as crucial in ensuring that these products are Shariah-compliant. Under the guidelines, Islamic banks will be required to obtain a resolution from the SSB before launching new products or services.

Impact of the Decision

The CBA’s decision to retract the resolution has been welcomed by many in the industry, who see it as a step towards ensuring the integrity and credibility of Islamic finance in Afghanistan. Khalid expressed his commitment to working closely with the CBA and SSB to develop Islamic banking products and services.

“We are committed to working closely with the CBA and SSB to develop our Islamic banking products and services,” said Khalid. “We believe that this will help us build trust with customers and contribute to the growth of Islamic finance in Afghanistan.”