The Taliban want to replace the conventional banking system with Islamic banking

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Law students and lawyers in Afghanistan file reports with JURIST on the situation there after the Taliban took over. Here, a JURIST staff correspondent in Kabul reports on recent changes to laws affecting Afghanistan’s banking and financial sector.

For reasons of confidentiality and security, we retain the name of our correspondent. The text has only been slightly modified to respect the author’s voice.

The Taliban-run Central Bank of Afghanistan has established a committee to review and amend the Central Bank Act and the Banking Act of Afghanistan. According to the Central Bank, a committee of seven members is set up to study and propose amendments to the law on the Central Bank.

The committee should adjust the legal framework of the Central Bank with the Islamic banking system and eliminate the conventional banking system.

The Central Bank Act is almost sixty years old and provides no basis for an Islamic banking system. Instead, the banking law provides mechanisms through which both Islamic and conventional systems can be implemented.

Commercial banks have special windows for Islamic banking which are regulated by the regulatory framework issued by the Central Bank.

The banking sector has contributed to the economic development of Afghanistan over the past two decades and Islamic banking is by far one of the fastest growing sectors not only in Afghanistan but in the Middle East market.— JURIST

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