Afghan Banking System Facing Existential Crisis: UNDP Reporton November 22, 2021 at 3:19 pm

The United Nations warned Monday that Afghanistan’s banking system is on the verge of collapse because of consumers unable to repay loans, fewer deposits, and other liquidity problems, leading to a social crisis in an already fragile economy. “Afghanistan’s financial and bank payment systems are in disarray,” the United Nations Development Programme (UNDP) said in the three-page report. A bank run on deposits “must be resolved quickly to improve Afghanistan’s limited production capacity and prevent the banking system from collapsing.” The situation report detailed the current scenario of the banking and finance sector in the war-torn country as well as prior to the Taliban taking over Kabul on Aug. 15, 2021. Humanitarian assistance is being thwarted by the liquidity crisis facing Afghan banks. Depositors are lacking confidence while international markets are shying away from investments with IMP projections for 2021-2022 reporting up to 30 percent contraction of the economy. There …

Naveen Athrappully

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