Taliban-Led Central Bank of Afghanistan Moves to Adopt Islamic Banking System
The Taliban-led Central Bank of Afghanistan has formed a committee to review and amend the country’s banking laws with the goal of replacing the conventional banking system with an Islamic one. The seven-member committee will study and propose amendments to the Central Bank Law, aiming to integrate the Islamic banking system into the country’s financial framework.
Concerns Over Lack of Expertise
The move has raised concerns among law students and lawyers in Afghanistan, who are worried about the lack of expertise on Islamic banking among the committee members. The committee lacks individuals with experience in Islamic banking, making it unclear how they will evaluate the current regulatory framework and propose new regulations.
- Law students and lawyers express concern over lack of expertise on Islamic banking
- Committee members lack experience in Islamic banking
Commercial Banks Ordered to Convert
Commercial banks have been instructed by the Central Bank to convert to an Islamic banking system. The First Micro Finance Banking Bank of Afghanistan has already taken steps to restructure itself as an Islamic bank. However, experts warn that the country’s financial system faces significant challenges in enforcing an Islamic banking system.
- Commercial banks ordered to convert to Islamic banking system
- Challenges ahead: lack of capacity among regulators and banking officials
Concerns Over Central Bank’s Ability to Enforce Regulations
The situation has also raised concerns about the Central Bank’s ability to enforce its own regulations. Reports have emerged of employees being instructed to comply with certain religious practices in order to keep their jobs. The Central Bank has established a “Propagation of Virtue and Prevention of Vice” section, which is reportedly instructing employees to maintain beards, pray five times a day, and adhere to other religious practices.
- Concerns over Central Bank’s ability to enforce regulations
- Employees instructed to comply with certain religious practices
Background: Economic Struggles in Afghanistan
The move to adopt an Islamic banking system comes as the country’s economy continues to struggle in the aftermath of the Taliban takeover. The banking sector has played a crucial role in Afghanistan’s economic development over the past two decades, and Islamic banking has been a growing sector not only in the country but also in the Middle East market.
- Background: economic struggles in Afghanistan
- Banking sector key to economic development
Uncertainty Ahead
The situation remains uncertain, with no clear timeline or process for approving the proposed changes. Meanwhile, commercial banks are being instructed to convert to an Islamic banking system, raising concerns about the impact on the country’s financial stability and economic development.
- Uncertainty ahead: lack of clarity on timeline and process for implementing changes
- Concerns over impact on financial stability and economic development