Kabul Bank
| Company type | Private |
|---|---|
| Industry | Banking, Financial services |
| Predecessor | Kabul Bank |
| Founded | 2004 |
| Headquarters | Kabul , Afghanistan |
| Products | Current accounts, Savings accounts, Fixed deposits, ATM services |
| Website | www |
New Kabul Bank is a privately owned financial institution based in Kabul, Afghanistan. Initially launched in 2004 under the name Kabul Bank as Afghanistan's inaugural private bank, it was rebranded in 2011 as New Kabul Bank following a significant corruption incident.
Serving as the main channel for disbursing salaries to the national army and security forces, the bank provides various account types including Current, Savings, and Fixed Deposits, complemented by branch networks and automated teller machine access. Its operations are regulated by the Central Bank of Afghanistan (Da Afghanistan Bank−DAB), the General Directorate of Treasury, and the Afghanistan Ministry of Finance (MOF).
Establishment
Founded in 2004, Kabul Bank connected with the international financial community through SWIFT, facilitating cross-border transactions. It established correspondent banking links with seven foreign banks located in Germany, China, Iran, Tajikistan, Saudi Arabia, and India.
Corruption Controversy
In 2011, Kabul Bank became the center of one of the most extensive banking fraud cases recorded. Investigations uncovered that top executives, including the Chairman, had embezzled close to US$1 billion through unauthorized loans and personal use. By late 2010, fears over the bank’s stability led depositors to withdraw $180 million within just two days. Subsequently, senior management was dismissed and placed under house arrest, with formal charges filed in 2011.
Despite government intervention and assurances to privatize the bank after restructuring, recovery of misappropriated funds remained under 10% by late 2011. According to a USAID report, insiders had diverted approximately $850 million through fraudulent means. This scandal gravely undermined Afghanistan’s financial system and deterred investor confidence.
Significantly, Mahmood Karzai, brother of then-President Karzai, was linked to the scandal due to large loans he received and faced investigations by U.S. authorities for alleged tax evasion and other offenses related to his connections with the bank. The fallout sparked public protests at bank locations and culminated in a fatal suicide bombing targeting police withdrawing salaries at a Kabul Bank branch in Kandahar in December 2010.
Events of 2011
On 19 February 2011, insurgents attacked a Kabul Bank branch in Jalalabad, Nangarhar province, killing at least 38 people, including 13 police officers. The assault involved three suicide bombers detonating explosives inside the facility and intense combat with security forces lasting over four hours. Both President Hamid Karzai and NATO condemned this deadly incident—the worst since June 2010.
In July 2011, Transparency International reported ongoing corruption challenges impacting Afghanistan’s economy, investment climate, security environment, and civil society—issues closely tied to the Kabul Bank crisis. Mahmood Karzai denied U.S. tax evasion allegations while emphasizing his commitment to Afghanistan’s reconstruction.
Earlier in January 2011, acting CFO along with several Pakistani staff fled to Pakistan fearing arrest; meanwhile Afghan officials detained multiple managers involved in unlawful fund transfers. In February, Da Afghanistan Bank Governor Abdul Qadir Fitrat announced enhanced regulatory measures for banks managing $1.5 billion in government payroll funds previously overseen by Kabul Bank. Fitrat estimated that $579 million was vulnerable due to Kabul Bank’s irregularities but ruled out liquidation prospects, forecasting private ownership within three years. He resigned in July 2011 after relocating to the United States citing threats and scapegoating.
Following a February visit by U.S. Deputy Treasury Secretary Neal Wolin, Afghanistan’s finance ministry acknowledged that inadequate international assistance exacerbated the crisis due to flawed audits and insufficient oversight. Wolin recommended swift receivership aligned with IMF guidance.
Since 2011, reports from the U.S. Special Inspector General for Afghanistan Reconstruction (SIGAR) indicate that Karzai’s administration opposed U.S.-backed banking reforms after Kabul Bank’s collapse. After Karzai left office in 2014, President Ashraf Ghani intensified efforts to recover stolen assets and address corruption linked to Kabul Bank by reopening investigations.
In September 2010, Da Afghanistan Bank expressed willingness to provide loans to Kabul Bank if necessary. Following government bailout interventions, privatization initiatives commenced with bids starting around 2015. In 2016, Afghanistan’s Joint-Stock Company offered $31 million for New Kabul Bank acquisition; Pakistan’s MCB Bank also submitted bids ahead of planned privatization scheduled for October 2018.
See also
- Corruption in Afghanistan
- Da Afghanistan Bank
- Special Inspector General for Afghanistan Reconstruction
- Transparency International
- Ferozi FC
External links
- Articles with short description
- Banks of Afghanistan
- Banks established in 2004
- Banks established in 2011
- Banking controversies
- Bank failures
- Controversies in Afghanistan
- Corporate scandals
- Corruption in Afghanistan
- Financial services in Afghanistan
- Islamic banks
- Hamid Karzai
- Karzai family
- Organizations based in Kabul
- 2004 establishments in Afghanistan
- 2010s in Afghanistan
- 2011 establishments in Afghanistan
- 2011 scandals