Afghanistan's private banks are under threat of closure - AFG SMART BLOG

What will be the future of Afghanistan's private banks?

Afghanistan's private banks have been in a major crisis since the fall of the previous government and the fall of the Taliban.  All people want to get their money out of it, but no one wants or has no money to store it in banks.

 The crisis of private banks became apparent in the first weeks after the Taliban came to power.  At the time, thousands of people turned to banks to withdraw their money, but the Taliban-controlled Da Afghanistan Bank imposed regulations on cash withdrawals, citing a lack of cash and dollars in banks.

 One week after the fall of the previous government, Da Afghanistan Bank imposed restrictions on its customers and anyone could withdraw only ۲۰۰ 5 or 20,000 afghanis.  He then increased the amount a little to ۴۰۰ 5,000 and 5,000 afghanis.

 Now all the ATMs in Kabul from which people can withdraw their money are inactive and people are forced to go directly to the banks.

 An official at Da Afghanistan Bank, who did not want to be named in the report, told Deutsche Welle that one of the biggest problems for banks at the moment is that everyone wants to withdraw money and no one is willing to accept it.

 He said there was no credit in the banks at present and only debit was available.  Therefore, the banks are facing a monetary crisis and if this situation continues, Afghanistan will face a crisis of bank collapse.

 He said that in the past when people put money in banks, the banks would take advantage of it, take commissions from them and also give loans.  But now that people are not investing and lending money, banks are no longer able to cover their staffing, rent, electricity and other expenses.

 He added that the negative effects of this situation on banks are still being felt.  Some private banks in Kabul have closed their offices and reduced their staff.  The future of these banks is unknown.

 Economists believe that the continuation of the banks' operations depends on the political and economic conditions, and that if conditions change, private banks may be able to resume operations properly.

 An official at New Kabul Bank, speaking on condition of anonymity, told Deutsche Welle that the bank now only gives money to the public and no one intends to store it in the bank.

 Loss-making banks

 Saifuddin Saihoon, a professor of economics at Kabul University, told Deutsche Welle that Da Afghanistan Bank's job was to pursue monetary policy and that if it did not have monetary reserves, it would not be able to maintain the value of the afghani.  This is one of the reasons why the afghani has lost so much value.

 "If this situation continues, the banks will collapse, because the world has cut off its development aid and Afghanistan is isolated," he said.  According to him, the first sector to continue to suffer from this situation is the banks.

 He also says that banks operate as a result of economic cycle and economic activity and when trade and economic activities do not exist, banks also break down.  Eventually these banks become like a petty, respecting society and eventually go bankrupt.  There is no doubt about it. "

 Lost trust

 A former government economist who closely follows the activities of state-owned and private banks told Deutsche Welle that an important feature of banks is the public's trust in them, which has now collapsed.

 "Unfortunately, after the fall of the regime, that confidence has waned and come close to zero," he said.  "Everyone who has money in the banks is trying to get their money out."

 He added that even if billions of dollars flow into Afghanistan now, banks would not be able to regain lost trust.

 Consequences of bankruptcy of banks

 Analysts say the decline in banking performance has had a devastating effect on small and large investments and severely hurt economic performance.  Banks play an important role in the monetary and economic movement of a society as a link between the people and the capitalists and when this link is broken, the result is economic crisis, unemployment and disruption of economic activity.  And are fragmented with the private sector.

 A former government analyst says that "in such a scenario, investors are having difficulty repaying loans, which in turn will lead to a decline in investment in various sectors and will result in the collapse of new companies and sectors."

 Crisis of non-existence of monetary flow

 Before the fall of the previous government, the international community paid  3 billion a year to Afghanistan's security sector.  Economic analysts say the same amount of money has flowed into Afghanistan through foreign missions and embassies, but not after the fall of the government.

 Sehwan says the cut in international aid has led to a shortage of money in banks, and that the money that flows into banks as a result of commercial and industrial activity does not exist in Afghanistan.

 "The monetary crisis is a major economic crisis that is causing the economy to stagnate and collapse, leading to the collapse of all productive, service, commercial and industrial activities," he said.

 The International Monetary Fund warned in September that Afghanistan's currency reserves were declining and that if the Taliban were unable to bring cash into the market, banks would be closed.