Islamic bank of Afghanistan (IBA) has been granted a license by Afghanistan central bank. IBA will be the first lender in the country that will be based on interest-free principles of Islamic finance and all operations will be conducted accordingly.
Since it was acquired by Azizi Bank in 2009 the IBA was known as Bakhtar Bank and was operating under conventional banking license.
After the conversion of its balance sheet on April 9, First Islamic Bank of Afghanistan was granted a license by ‘Da Afghanistan bank’ central bank of Afghanistan, according to Faizan Ahmed, member of IBA management board and Chief financial officer.
Assets and deposits were being converted to adhere to Islamic principles, this will include a ban on interest-bearing debt, gambling, and alcohol.
Offering services across 59 branches the IBA has paid-up capital of $25 million and has held $187 million of deposits as of December.
To attract more people into financial system Islamic finance and banking is a very important feature in the small banking sector of Afghanistan. It has been estimated that only 5.7 percent of the population is dealing with the banking sector.
First Islamic Bank of Afghanistan, aims to capitalize on its network also being the third largest bank in the country it is forecasting to double its balance sheet in next two years.