FEATURE STORY

Banks and Clients Benefit from Investments in Afghanistan's Financial Infrastructure

November 10, 2015

Image

Before installation of the Public Credit Registry (PCR) system, obtaining loans from banks would take two to three months. It now only takes 7 to 10 days. 

Rumi Consultancy/World Bank

STORY HIGHLIGHTS
  • The recent establishment of the Public Credit Registry to determine the credit performance of borrowers has significantly improved access to financing of small and medium enterprises.
  • The Public Credit Registry is an electronic online system, operated and managed by Da Afghanistan Bank, the central bank of Afghanistan.
  • Da Afghanistan Bank’s work to enable transparency and efficiency in the credit granting process is supported by the World Bank Group’s International Development Association and International Financial Corporation, and co-financed by Harakat as part of efforts to modernize Afghanistan’s financial system.

KABUL CITY, Kabul Province – Bank officer Mir Ahmad Sami is busy running an online inquiry of a company’s credit history, which he knows will only take a few minutes.                           

“Prior to the deployment of the Public Credit Registry system, verification of a customers’ credit history would take weeks or months, but now it is only a button click away,” says Mir Ahmad, who works at the private Afghanistan International Bank (AIB). 

Mir Ahmad has become much more productive after the deployment of the electronic Public Credit Registry (PCR), which allows banks to view the credit history of credit applicants, obtain credit scores, and make informed credit decisions based on the information available online. He recently received training on the new PCR system at Da Afghanistan Bank (DAB), Afghanistan’s central bank, which operates and manages the electronic online system.


Image

With the implementation of the PCR, bank customers are able to obtain free annual credit reports, enabling them to better understand their financial position.

Rumi Consultancy/World Bank

" The Public Credit Registry system has proven to be effective in ensuring loan safety, customer identification, and security of their properties…It has established a high degree of trust among banks and micro-finance institutions. "

Maiwand Azizi Hotak

Deputy Director of Credits and Loans, Azizi Bank

Image

The World Bank Group’s International Development Association (IDA) and International Financial Corporation (IFC) provided extensive support to DAB on the deployment and implementation of the system, with co-financing from Harakat

Rumi Consultancy/World Bank

DAB championed the establishment and implementation of the PCR system to enable transparency and efficiency in the credit granting process and to foster financial system stability. It was launched to tackle the challenges of credit allocation facing banks and other small financial institutions. The World Bank Group’s International Development Association (IDA) and International Financial Corporation (IFC) provided extensive support to DAB on the deployment and implementation of the system, with co-financing from Harakat.

“The PCR is an advanced credit system that is currently available in Afghanistan, and does not as yet exist in many neighboring countries,” points out Nesar Yosufzai, Director General, Public Credit Registry at DAB.

The PCR system became fully operational in 2014 and is now utilized by all commercial banks and two microfinance institutions. According to Yosufzai, more than 108,000 contracts were registered in the PCR system, as of May 2015.

Through the PCR system, bank customers benefit from a faster credit process as well as a better understanding of their finances. “With the implementation of the PCR, bank customers are able to obtain free annual credit reports, enabling them to better understand their financial position,” says Yosufzai.

System meets customer needs

Dr. Shahid Niazi, director of Zarafshan Construction Company, is an active customer of Azizi Bank and had taken a loan worth $1 million to implement a project contract with the municipality. “Before installation of the PCR system, obtaining loans from banks would take two to three months while now it takes only 7 to 10 days,” he says.

Dr. Niazi has been able to obtain a bank loan three times. Whereas previously he would sometimes fall behind in his work schedule due to the lengthy time required for loan approval and processing, this is now no longer a problem.

The PCR system has not only increased customer confidence but also bank confidence in the credit process. Maiwand Azizi Hotak, Deputy Director of Credits and Loans at Azizi Bank, says: “All the contracts have been registered in the PCR system, which has proven to be effective in ensuring loan safety, customer identification, and security of their properties. The system is active 24/7 and accessible through Internet. It has established a high degree of trust among banks and microfinance institutions.”


Api
Api