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, AMA and ABA would like to establish working relationship between commercial banks and MFIs in Afghanistan. To initiate with, AMA and ABA are planning to organize a roundtable in Kabul inviting all the banks, MFIs and relevant stakeholders with the following objectives:
- 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
