Afghanistan’s central bank has granted a license to the Islamic Bank of Afghanistan (IBA), the first lender in the country to apply the interest-free principles of Islamic finance in all its operations, a senior bank official told Reuters.
The IBA was previously known as Bakhtar Bank and operated under a conventional banking license since it was acquired by Azizi Bank in 2009.
The central bank, Da Afghanistan Bank, granted the license on April 9 after the IBA completed the conversion of its balance sheet, said Faizan Ahmed, chief financial officer and member of the IBA management board. The bank began converting its assets and deposits in January to adhere to religious principles that include bans on gambling, alcohol and interest-bearing debt.
The IBA had paid-up capital of $25 million and held $187 million of deposits as of December, offering its services across a network of 59 branches. Afghanistan’s banking sector is small, but Islamic finance is seen as an important feature that could help attract more people into the financial system.—Reuters