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

KABUL CITY, Kabul Province – Bank officer Mir 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, who works at the private Afghanistan International Bank (AIB). 

Mir 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.

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 system became fully operational in 2014 and is now utilized by all commercial banks and two microfinance institutions. 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.

System meets customer needs

Dr. Niazi, director of a 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.