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Cablegate: Commercial Banking Sector Update - June 2003

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS KABUL 001565

SIPDIS

SENSITIVE

NSC FOR ZKHALILZAD, JDWORKEN, HMANN, RHANSON, DSEDNEY
DEPT FOR SA/PAB, SA/AR, EB/FO
MANILA PLEASE PASS AMB PSPELTZ
USDOC FOR DAS/TD MURPHY AND AFGHAN RECON TASK FORCE
USDOC FOR ITA/MAC/OSAO/ADLER
STATE PASS USAID FOR JPRYOR
STATE PASS TDA FOR DSTEIN AND JSUSSMAN
STATE PASS TREASURY FOR U/S TAYLOR, LMCDONALD
STATE PASS OPIC FOR RCONNELLY AND DZAHNHEISER

E.O. 12958: N/A
TAGS: ECON EFIN AFIN AF
SUBJECT: COMMERCIAL BANKING SECTOR UPDATE - JUNE 2003

1. (SBU) In previous reporting, post has identified the lack
of commercial banking facilities in Afghanistan as a major
obstacle to attracting increased investment. Further, the
lack of reliable banking institutions, and the resulting
prevalence of NGOs and businesses having to keep large
amounts of cash on hand has also increased crime rates.
While the principal impediment to attracting foreign
commercial banks ) the passage of the commercial banking law
and the central banking law ) are still unresolved, some
positive developments are expected soon.

2. (SBU) The Ministry of Finance has been trying ) without
success - for at least the past eight months to attract two
foreign banks. The Ministry of Commerce secured a visit from
officials of Britain,s Standard Chartered during a visit to
London in the spring of 2003. Standard Chartered is now
reported to open its first branch in Afghanistan in August
2003. Most recently, in late May 2003, the Central Bank has
invited eight Pakistani banks to operate throughout
Afghanistan.

3. (SBU) During the past week, U.S. entrepreneur Jack Heidary
visited Kabul to discuss opening a $25-$50m OPIC-financed
commercial bank. Heidary met with Afghan government
officials including Minister of Finance Ghani, Minister of
Commerce Kazimi, Central Bank Governor Ahady, and Embassy and
U.S. military representatives to assess the viability of a
commercial bank. Heidary,s due diligence visit will inform
a report to OPIC officials regarding the mix of services,
locations and clientele for this project. Among the services
contemplated are US Dollar and Afghan afghani direct deposit
accounts for the Afghan civil service, NGO, and international
military and diplomatic community officials. Heidary
suggested bank branches may be based in Kabul and other major
cities at first, and also explored the possibility of
providing ATM services.
HANSON

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