18 January 2004 1708 hrs (SST)
KABUL : Over the next few weeks Afghanistan's banking sector will move from comprising just six rundown specialist banks to one where several international commercial operations compete for business -- with perhaps even an ATM machine around the corner.
The National Bank of Pakistan is the only foreign bank operating in the country, but competition is building with First Micro Finance Bank, majority-owned by the Agha Khan Fund for Economic Development, and British-based Standard Chartered preparing to open soon.
The Afghanistan International Bank (AIB), a local bank with international shareholders and ING management, and Pakistan's Habib Bank are also set to open their doors in the capital once they receive licences, all but a technicality, according to Afghanistan's central bank governor, Anwar-ul-Haq Ahady.
Of the existing six banks in the country, the Pashtuni Tejaraty Bank and the Milli-e Bank (National Bank) will be restructured.
The remaining four -- the Agricultural Bank, Industrial Bank, Mortgage Bank and Export Promotion Bank -- will be merged or liquidated, Ahady said.
The government has also had "at least two more applications" for banking licences and a number of other banks in Pakistan and Iran have expressed interest, Ahady said.
"In the past, that section of the market economy was heavily controlled by the state, we are abandoning that," Ahady told AFP.
"We will move to a more market economy type of economy, which means competition and that competition is open to Afghans and to internationals."
Ahady said he hoped the foreign banks, each of which must guarantee capital of five million US dollars to gain a licence, would become more important than the public system and develop the market for credit in the country, until now an unknown quantity.
"The demand that is really a legitimate demand, I don't know what the size of that is and I hope these banks will develop it."
Ahady would like to see 10 banks operating in Afghanistan, with the option of handing out more licences if demand is strong enough.
While it isn't Wall Street, the opening of foreign banking institutions in Kabul will mean residents of the war-shattered capital will be able to stop carrying wads of cash everywhere.
They will also be able to avoid using the traditional and informal "hawala" money transfer system, which does not record transactions and is suspected of being used by terrorists and money launderers.
Chief executive officer of the AIB John Haye said one of the bank's main tasks would be to provide international aid workers, embassy staff and non-government organisations with money transfers.
"The only transfer system that exists is the hawala system. From what I hear that system works well but it's not transparent, you don't get a receipt and that's what self-respecting institutions want."
Getting money out from under people's beds and into banks where it could be used by businesses would also help the economy, Haye said.
AIB, which plans to open between five and seven banks in major cities, will also assist reconstruction and trading companies by providing credit and working capital.
There is also a plan to provide some ATMs, initially inside the bank itself then within other secure compounds such as those of embassies, the UN and military forces.
President of the National Bank of Pakistan Syed Ali Raza said his bank planned to expand into the troubled main southern city of Kandahar and the eastern city of Jalalabad and install an ATM network within three months.
He said he was not troubled by the increased violence in the country, marked by attacks in the south and southeast.
"We are quite comfortable to do this... we don't believe it (increased unrest) is going to be an impediment to our business," he said.
But for now the issue of foreign banks in the country is probably of little interest to most Afghans, who live in poverty, and Ahady admits as much.
"For most individuals they have so little, such a small amount of money, that it doesn't probably make sense for someone who has 2,000 Afghanis to establish a bank account because that's 50 dollars," he said.
And does Ahady think there will ever be an ATM in Kabul? "I don't know," he said. "But for the time being I am pleased that they want to do that."