Banks and MFIs Sensitization and Interface Round-table was Held in Kabul
date: September 20, 2017
Commercial Banks and MFIs in Afghanistan are currently working in isolation and there has not been any operation related interaction- except simple banking relationship, among them. While as per the prevailing practice in other similar countries, they need each other for their businesses, thus proper working relationships should be established among them. The MFIs need to diversify their sources of fund and local commercial banks could be a good and reliable source for them. Similarly, the banks as per new regulation from DAB, need to invest a considerable percentage of their portfolio domestically and MFIs could be the best option to invest in terms lending to them. Further, since banks are liquid, so, this is good opportunity to utilize their liquidity with low risk. The Banks currently, due to lack of awareness about MFIs operations, their products and services, are not interested to lend to MFIs.
Keeping this in mind, ABA and AMA organized a roundtable on September 20, 2017 in Kabul to establish working relationship between commercial banks and MFIs in Afghanistan.
The objective of the round bale was as follows.
• To increase awareness among senior bankers regarding status, business model and operations of MFIs for facilitating debt flow from banks to the MFIs for onward lending to the clients to improve financial inclusion in Afghanistan.
• To discuss what will make the Banks comfortable to lend to MFIs including collateralization as per prevailing DAB norms.
• To discuss business models which the Banks are likely to accept for onward lending to MFIs
The roundtable was attended by Mr. Qasim Rahimi, DAB Second Deputy Governor, Mr. Haseeb Financial Supervision, Team Leader, ABA Board of Directors and Management, AMA Board of Directors and Management, CEOs/Top Management of Microfinance Finance Institution (MFIs) and ABA member banks CEOs, /Top Officials attended.
Mr. Frank van der Poll, the Chairperson of AMA/Board member of ABA commenced the meeting by welcoming remarks.
H.E. Mr. Qasim Rahimi Second Deputy Governor of the Da Afghanistan Bank (DAB) talked about the role and importance of Banks and MFIs in the economic development of Afghanistan. He added that Central Bank of Afghanistan is fully supporting any investment by banks in MFIs, what is in favor of business and the economy.
Subsequently, a comprehensive presentation was delivered by ABA Executive Director Mr. Najibullah Amiri on ABA activities and achievements, recent status on banking sector in terms of asset, deposits, Non-Performing loan etc. Thereafter a presentation on AMA activities and update of on Micro finance status, business model and operations was delivered by Mr. Najibullah Samim AMA Executive Director. ABA member banks (Bakhtar Bank CEO and Ghazanfar Bank CCO presented presentations on debt financing of banks to MFIs experienced in Pakistan and India respectively.
The round table was chaired by Mr. Frank van der Poll with contribution of Mr. Jayanta Ray CEO of Ghanzanfar Bank and Board Member of ABA as moderator of the discussions.
Finally, after exchange of Ideas and discussions between banks and MFIs, considering the current status of the two parties business and Da Afghanistan Bank Regulation, it was agreed that a joint committee comprise of ABA and AMA should be formed. The committee shall do feasible studies and share their views with members for further action.