New Kabul Bank
| Company type | Private |
|---|---|
| Industry | Banking and financial services |
| Founded | 2004 (as Kabul Bank) |
| Fate | Reconstituted in 2011 after corruption scandal |
| Headquarters | Kabul , Afghanistan |
Area served | Afghanistan |
| Products | Current accounts, Savings accounts, Fixed Deposit accounts, ATM services |
| Website | www |
New Kabul Bank operates as a private financial institution based in Kabul, Afghanistan. Originally launched in 2004 under the name Kabul Bank—the country's inaugural private bank—it was reconstituted in 2011 after being implicated in significant corruption controversies.
This bank serves as the principal channel for distributing salaries to the national army and security personnel. Its services include Current, Savings, and Fixed Deposit accounts, complemented by branch networks and automated teller machine facilities. Oversight is provided by the Central Bank of Afghanistan (Da Afghanistan Bank−DAB), alongside the General Directorate of Treasury and the Ministry of Finance.
Establishment
Founded in 2004, Kabul Bank established connections worldwide through the SWIFT system, enabling international money transfers. It maintained correspondent banking relationships with seven financial institutions located in Germany, China, Iran, Tajikistan, Saudi Arabia, and India.
Corruption Controversy
In 2011, Kabul Bank was at the center of one of the most notorious banking scandals ever recorded. Investigations uncovered that its Chairman and other insiders had misappropriated close to US$1 billion for personal gain and unauthorized loans to affiliated parties. By late 2010, depositor withdrawals escalated dramatically to $180 million within a few days, prompting urgent appeals for intervention from both Afghan authorities and U.S. officials to stabilize the financial sector.
Following management upheavals in 2010, several senior executives were placed under house arrest and subsequently arrested in 2011. The Central Bank announced intentions to restructure and divest Kabul Bank within a three-year timeframe; however, international stakeholders advocated for an expedited closure. A USAID assessment estimated that $850 million had been siphoned off via fraudulent lending schemes. Despite government control since 2010, recovery efforts had retrieved less than 10% of the missing funds by late 2011.
The scandal implicated prominent individuals, including Mahmood Karzai—brother to then-President Hamid Karzai—who reportedly received millions through questionable loans and faced investigations by U.S. authorities for allegations including tax evasion and racketeering. The crisis sparked public demonstrations with depositors protesting outside bank branches. Additionally, in December 2010, a suicide bombing targeted police personnel collecting salaries at a Kabul Bank branch in Kandahar, resulting in multiple casualties.
Events of 2011
On 19 February 2011, a Kabul Bank branch located in Jalalabad, Nangarhar province suffered an insurgent assault that claimed at least 38 lives, including 13 police officers. Three suicide bombers detonated explosives inside the facility, leading to a prolonged confrontation with security forces lasting over four hours. President Hamid Karzai and NATO representatives condemned this attack as the deadliest since June 2010.
In July 2011, Transparency International underscored persistent corruption challenges undermining Afghanistan's economy, investment environment, and banking industry—attributing these issues to misconduct within the public sector. Mahmood Karzai faced U.S. tax evasion charges which he denied while emphasizing his dedication to Afghanistan’s reconstruction.
By early 2011, multiple Kabul Bank executives—including some Pakistani nationals—had fled amid probes into illicit fund transfers. Afghan law enforcement detained several managers implicated in these irregularities. Abdul Qadir Fitrat, Governor of DAB, announced enhanced regulations targeting banks responsible for managing government payrolls previously handled by Kabul Bank’s network. He revealed that $579 million was vulnerable due to suspected fraudulent activities—nearly double previous estimates—yet dismissed concerns about liquidation, forecasting private ownership within three years. Fitrat resigned in July 2011 after relocating to the U.S., citing threats and scapegoating by politically influential figures.
Following a visit from U.S. Treasury Deputy Secretary Neal Wolin in February 2011, Afghan officials acknowledged that insufficient international support combined with a flawed PricewaterhouseCoopers audit exacerbated the crisis. Wolin recommended placing Kabul Bank under receivership consistent with IMF guidance. Despite such pressures, the Karzai administration resisted U.S.-led banking reforms after the scandal, as detailed in reports by the U.S. Special Inspector General for Afghanistan Reconstruction (SIGAR) during 2013–14.
After Hamid Karzai’s presidency ended in 2014, President Ashraf Ghani intensified efforts to recover embezzled funds linked to Kabul Bank’s fraud case. Ghani reopened investigations into the scandal and committed to combating corruption within Afghanistan’s financial institutions.
In September 2010, Afghanistan’s Central Bank expressed willingness to extend loans to Kabul Bank if requested. Following government bailout initiatives, authorities invited bids by 2015 to privatize the reorganized entity known as New Kabul Bank. In 2016, Afghanistan’s Joint-Stock Company placed a $31 million bid for acquiring New Kabul Bank. Pakistan’s MCB Bank also submitted an offer 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
- Organisations based in Kabul
- 2004 establishments in Afghanistan
- 2010s in Afghanistan
- 2011 establishments in Afghanistan
- 2011 scandals