Afghanistan Looks to Islamic Banking System to Jump Start Finance

By Sam Willie

Reuters reports on a potential banking law in Afghanistan that would create a new framework for Islamic banking in the country. Traditional banks are shunned by an estimated 90% of households in Afghanistan for violating Islamic law by earning interest on investments. To date there are no standalone Islamic banks in Afghanistan, only limited Islamic banking products, offered by a few lenders through aptly named Islamic windows. These Islamic windows are not widely accepted because customers have doubts over their religious permissibility. It is hoped that the new Islamic banking system with religious compliance will increase deposits and in turn boost financing in a country that desperately needs economic growth.