Afghanistan’s top banker says officials have increased efforts to recover hundreds of millions of dollars in loans made by the country’s biggest lender, Kabul Bank, but they have only collected about five percent of the total so far.
Kabul Bank lost more than $900 million in funds and nearly collapsed last year due to alleged mismanagement, cronyism and questionable lending.
Central Bank Governor Abdul Qadir Fitrat said Wednesday they have recouped $47 million in loan money. He added the Afghan government is overseeing efforts to get bank executives, shareholders and others who received illicit loans to repay the money.
Fitrat said the Central Bank is dividing Kabul Bank in two to isolate the hundreds of millions of dollars in “bad” loans and create a new bank that handles the good loans and assets.
The move appears intended to appease the International Monetary Fund, which has suspended financial assistance to Afghanistan and has called for Kabul Bank to be put into receivership.
Afghanistan’s Central Bank took over Kabul Bank after the scandal caused a run on deposits there.
Kabul Bank handles the salaries of Afghan soldiers, police and teachers.
Last week, Afghan President Hamid Karzai blamed the international community for contributing to the near collapse of Kabul Bank.
Mr. Karzai told reporters that foreign advisers gave misleading information on the status of the bank, and that any misconduct would be prosecuted.
The financial fiasco has caused some international donors to question the stability of Afghanistan’s financial system, just as the country is trying to take on more responsibility for security and development.
