| Karzai signs law letting foreign banks into Afghanistan The Associated Press
09/16/2003
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KABUL - President Hamid Karzai approved a law Tuesday allowing foreign banks to set up in Afghanistan, a move designed to persuade Afghans to bring back billions of dollars from abroad to boost reconstruction after 20 years of war. Officials said three banks would get operating licenses Thursday: Standard Chartered of Britain, the National Bank of Pakistan, and a micro-credit bank supported by the Aga Khan Foundation. "Afghans are rich people, but their money is all in other countries. I want them to bring their money to Afghanistan,' Karzai said after signing the law. Standard Chartered is set to become the first international bank to open in the war-ravaged country, where most large transactions involve suitcases full of cash. Strong in developing countries across Asia, Africa and the Middle East, the bank plans to open a branch in Kabul as soon as possible to handle transactions for import-export companies and the burgeoning international community, said John Jones, the bank's project director in Kabul. The bank will introduce automatic teller machines and may eventually open branches in other major cities. "We're delighted the laws have been passed,' Jones said. ``We've never operated here before and will need to feel our way.' Afghanistan's banking system collapsed along with its communist government in 1992, when the Islamic mujahedeen captured Kabul. Afghans scrambled to move their money abroad, often to Pakistan, as the country headed into a decade of civil war. Central Bank Governor Anwar ul-Haq Ahady said the government would like to privatize the six banks operating in the country, all of which are state-owned, but acknowledged they are poorly capitalized and that there have been few offers. "Restructuring looks more plausible,' he said. Most Afghans transfer money using "hawala,' a system in which funds are sent via individual money traders in one country to their counterparts abroad. Finance Minister Ashraf Ghani said the government was drawing up new regulations to govern their activities, but didn't want to stifle them. "We'd like banks to compete with these money changers,' he said. Ghani said wealthy Afghans, including businessmen in Dubai and Moscow who hold up to US$5 billion abroad, and had been pressing for the banking reforms. ``We'll do everything we can to enable the return of these Afghanis,' he said. Karzai also passed a law to give complete independence to the Afghanistan Bank, the country's central bank, which is charged with keeping a lid on inflation and protecting the value of the national currency, the Afghani.
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