Afghans continue pulling money out
Nervous Afghans have continued pulling funds out of the nation's largest bank (AP)
Saturday September 04 2010
Nervous Afghans have continued pulling funds out of the nation's largest bank, despite assurances from the country's leaders that their money is safe.
Crowds gathered at Kabul Bank branches around the capital on Saturday to withdraw funds, saying they had lost faith in the bank's solvency following a change in leadership amid reports that tens of millions of pounds were lent to members of the political elite for risky property investments.
The bank run that began earlier in the week undermines efforts by the central government to build an efficient modern political and financial system to drag Afghanistan out of its dire poverty and political instability.
Along with handling personal accounts, the bank handles the payment of salaries to tens of thousands of public servants, police officers and soldiers.
"Kabul Bank has lost the trust of the people. Even the chairman resigned so all the people are concerned," said Mohammad Nawaz, head of an Afghan aid group who had been trying for three hours to withdraw the £9,700 in his account.
The New York Times and The Wall Street Journal reported on Wednesday that Kabul Bank's losses could exceed £194 million - more than the bank's assets. In addition, The Washington Post said Afghanistan's central bank had ordered Kabul Bank's newly resigned chairman to hand over £104 million in Dubai real estate holdings.
On Thursday, president Hamid Karzai reassured anxious bank customers, saying every penny of their deposits would be guaranteed by the government.
"The Kabul Bank is safe," Mr Karzai said in comments echoed by the country's central bank governor and independent banking association.
Despite the growing scepticism, Kabul Bank could still be the best option for Afghans with cash holdings, with its nationwide network of branches and cashpoint machines and ability to provide financial services such as loans, bill paying, and money transfers.
Press Association
