Asia

Asia

Afghan govt says bank safe amid rush for withdrawals

02 September 2010 23:15 (UTC +04:00)

Baku-APA. Afghan financial authorities and the owners of Afghanistan’s biggest bank said Thursday that Kabul Bank was in no danger of collapsing, as people across the country rushed to withdraw their money, APA reports quoting news.yahoo.com website.
Finance Minister Hazrat Omar Zakhailwal called a press conference to reassure customers of Kabul Bank that it was solvent, saying the administration of President Hamid Karzai fully backed the institution.
"My message to all the depositors is that their money is safe and the government of Afghanistan is standing behind Kabul Bank," he said.
"We know the money is there, they must not panic," he said of depositors.
"We pay 250,000 government employees through Kabul Bank. Today alone I have deposited one hundred million dollars to pay civil servants a week before Eid," he said, referring to next week’s major Muslim holiday.
"This shows our confidence in the bank," he said, adding that all loans taken out at Kabul Bank were backed by collateral valued at twice the loan.
Earlier in the day, one of the bank’s owners, Khalilullah Ferozi, said the bank was not facing a run and was supplying branches with enough cash to meet demand a day after US media allegations of corruption.
"There is not a run. We’re here and we are prepared to pay out as much as the depositors want to withdraw from their accounts," Ferozi, the bank’s former chief executive officer, told AFP.
"Of course we had problems but we’re absolutely fine now," he said.
The assurances came after long queues had formed at branches of Kabul Bank in cities across Afghanistan, with customers anxious about reports in major US newspapers that the bank was facing liquidity problems.
Ferozi is a major shareholder in the bank, along with a brother of President Hamid Karzai and others connected to senior government officials.
US newspapers reported on Wednesday that the central bank had replaced the bank’s two top executives -- Ferozi and chairman Sher Khan Farnud -- and ordered Farnud to hand over 160 million dollars’ worth of luxury property purchased in Dubai for himself and for cronies.
However, central bank chief Abdul Qadir Fitrat said on Wednesday that the pair had not been forced from office but had resigned after the introduction of new rules forbidding shareholders from holding senior positions.
"The central bank, the government of Afghanistan, is standing behind Kabul Bank and will never allow it to collapse," Fitrat told a news conference.
"Kabul Bank has no liquidity problems. Right now the Kabul Bank is functioning all over the country. Kabul Bank will never have liquidity problems in the future, inshallah (God willing)," he said.
Ferozi said that anxious customers had withdrawn 80 million dollars on Wednesday. By midday (0730 GMT) Thursday, customers had withdrawn 12 million dollars and deposited around four million dollars, he said.
"Kabul Bank is well prepared to meet the demands of depositors who want to withdraw their money. We had some cash problems in the branches but we have supplied enough," he said.
"The problem with cash supply arose because we had supplied the branches according to normal circumstances."
Kabul Bank reportedly handles electronic salary payments for Afghanistan’s police and military, and the US media reports have said any liquidity problems could destabilise the country’s economy and the counter-insurgency efforts.
From early morning, customers flooded branches of Kabul Bank in major cities, including Kabul, where hundreds of people gathered in the main banking chamber of the head office in the hope of withdrawing their funds.
Crowds also gathered at branches in the commercial city of Mazar-i-Sharif in the north, in Herat in the east, and the southern city of Kandahar, AFP correspondents said.
In Mazar-I-Sharif, a teller at the main Kabul Bank branch said depositors had withdrawn around 26 million dollars on Thursday, and the bank had taken four deliveries of cash.
While some demand for cash could be attributed to the upcoming Eid holiday, many of the people queuing said they were concerned about the bank’s solvency.
At the bank’s head office in Kabul, a 23-year-old man who asked not to be named said: "I want all my money. I want to withdraw all my money."