The Afghanistan Bank Association has said that Islamic banking is important for boosting money circulation and improving the country’s monetary system.
According to ABA, 11% of Afghans have deposited more than 280 billion AFN ($4 billion) in cash in banks, Wadsam reported.
“Demand for Islamic banking system is on the rise in Afghanistan. With the availability of Islamic banking service, more people will deposit money in banks and boost money circulation,” said ABA chief executive Najibullah Amiri.
Meanwhile, a number of residents have also called for expansion of Islamic banking in the country and believe that more people will trust the banks if Islamic banking system is present.
This comes as more and more people are refraining from depositing money in banks due to rising insecurity and political uncertainty.
Islamic banking refers to a system of banking or banking activity that is consistent with the principles of the Shari’ah (Islamic rulings) and its practical application through the development of Islamic economics.
The principles which emphasize moral and ethical values in all dealings have wide universal appeal. Shari’ah prohibits the payment or acceptance of interest charges (riba) for the lending and accepting of money, as well as carrying out trade and other activities that provide goods or services considered contrary to its principles.
While these principles were used as the basis for a flourishing economy in earlier times, it is only in the late 20th century that a number of Islamic banks were formed to provide an alternative basis to Muslims although Islamic banking is not restricted to Muslims.
Meanwhile, Azerbaijan said Saturday that the country could see the launch of its first standalone Islamic bank as early as next year as the government makes progress to introduce legislation to facilitate interest-free finance, an advisor to the new venture told Reuters.
