Afghanistan’s banks brace for bedlam after Taliban takeover

By- Kanvi Gupta

Afghan economic experts said that after the Taliban attack, Afghanistan’s banking system is now in a state of collapse and the people are running out of money. Bankers are facing an uncertain future in liquidity and female staff employment. It is very critical for the country to recover from the crisis.

Banks were been closed for almost ten days and were expected to open on 24 August. The banking system went to a halt after the Western-backed government collapsed amid the pullout of U.S. and allied troops. Still there are evidences for reopening of banks and banking services coming to normal with large crowds outside banks in Kabul on Wednesday, August 25.

Gazal Gailani, the trade and economic adviser at the Afghan embassy in London, said that the banks have run out of money and there are no signs which show that the banks will reopen.

Rural areas get a large part of their income in cash but for the people living in cities who are government employees and some others too whose salaries come in their bank account, it is very difficult to manage as Afghanistan has a mostly cash-based economy. The lenders are in a precarious position.

The Afghanistan Banks Association (ABA) had reached out to the central bank to coordinate steps on a return to normality, said Syed Moosa Kaleem Al-Falahi, chief executive and president of Islamic Bank of Afghanistan (IBA), one of Afghanistan’s three largest banks. Commercial banks have decided not to start services until they get confirmed liquidity and security arrangements from the Central Banks.

Da Afghanistan Bank (DAB), the central bank, provided financial support to banks during last week’s cash squeeze, said a banker at one of Afghanistan’s largest lenders, speaking on condition of anonymity. But its ability to continue this seems to be uncertain, he added.

This week, the Taliban said that it had named Haji Mohammad Idris, a loyalist with no formal financial training, as DAB’s acting governor. The banker at one of Afghanistan’s largest lenders banks said that their bank had decided to ensure it could continue its operations dismissing 20% female staff.