Hawala System Sees Surge as Commercial Banks Downsize and Close Branches
Kabul, Afghanistan - The traditional money transfer network, Hawala, is experiencing a significant surge in activity as commercial banks continue to downsize and close branches across the country.
Record Levels of Transactions
Reports from Sarai Shazada, Afghanistan’s largest foreign exchange market, indicate that Hawala transactions have reached record levels. This suggests that the system is poised to reclaim its dominance in the financial sector. The trend is not surprising, given the recent trend of commercial banks scaling back their operations due to a liquidity crisis and uncertainty surrounding the country’s economic future.
Central Bank Announces Consolidation Plans
Meanwhile, Da Afghanistan Bank (DAB), the country’s central bank, has announced plans to consolidate its operations. This move is seen as a positive step towards strengthening the financial sector, which has been plagued by instability and inefficiencies in recent years. The consolidation of operations could further boost the Hawala system’s growth.
Why Hawala is Booming
The surge in Hawala activity can be attributed to the fact that the system provides a more accessible and efficient means of transferring money, particularly for individuals and small businesses that lack access to traditional banking services. With commercial banks’ branches closing left and right, the Hawala system has become an essential lifeline for many Afghans who need to send or receive payments.
New Opportunities and Financial Inclusion
The growth of the Hawala system is also expected to create new opportunities for exchange dealers and money service providers, who will benefit from increased demand for their services. This development is seen as a positive step towards promoting financial inclusion and stability in Afghanistan.
Conclusion
In conclusion, the surge in Hawala activity is a welcome development that highlights the importance of alternative financial systems in times of economic uncertainty. As commercial banks continue to downsize and close branches, it is essential that policymakers and regulators work together to create an environment that supports the growth of innovative financial solutions like the Hawala system.
Key Points:
- Hawala transactions have reached record levels in Afghanistan
- Commercial banks are downsizing and closing branches due to a liquidity crisis and economic uncertainty
- Da Afghanistan Bank has announced plans to consolidate its operations, which could boost the Hawala system’s growth
- The Hawala system provides a more accessible and efficient means of transferring money for individuals and small businesses
- The growth of the Hawala system is expected to promote financial inclusion and stability in Afghanistan.