Islamic Banking is the fastest growing segment of the
Financial and Banking Industry in the World. New Kabul Bank
as a biggest commercial bank in Afghanistan identifies and
respects the desire of a growing number of its valued
customers to conduct their banking and financial
transactions in accordance with Islamic Law (Shariah), thus
has launched the Islamic Banking Window providing Shariah-compliant
products and services.
Our Shariah-compliant financial products and services range
from simple deposits, through the operation of current,
savings and investment accounts to more complex and
innovative cutting-edge financing structures covering both
personal and business banking.
On the liability side of the balance sheet, the Islamic bank
mobilizes funds through the contract of mudaraba or wakala
by which Islamic banks agree to manage the funds of
customers (investment account holders) in return for
receiving a share of the profits or fixed fee from investing
the funds and investment account holders agree to bear any
losses incurred from investing their funds.
For the customers who wish to maintain only current, who are
not very focused on the returns but more for banking
convenience and safety, Islamic banks use the contract of
Al-wadi’a (safe custody) or Qard al-hasan (benevolent loan)
contract. Under these Shariah principle, the money deposited
into this account is not subject to any risk in investment
nor is exposed to profit or loss. The money is payable on
No interest is paid to the customer. However, it is not
prohibited to give a hibah or gift or some reward which is
not predetermined, at the end of the contract.
On the asset side of the balance sheet, Islamic bank cannot
lend money by charging interest but have to engage in
permissible investment and trading activities. This is
reflected in the structure of their assets based or trade
concept being different from that of conventional banks.
Islamic banks use various Islamic financial instruments or
tools based on Shariah contracts to lawfully earn profits on
shareholders’ and depositors’ funds. These will be discussed
in detail in the next section.
Islamic banks enter into various contractual relationships
with their customers which are allowed in Islam which are
basically of three different types:
a) Sale contract – al bai
b) Rental contract – al ijarah
c) Partnership contract –
mudaraba and musharaka
Islamic Banking Window is a new business for the New Kabul
Bank which started in mid 2010, had to play catch up from a
zero base. Within short period of one year, Islamic Banking
Window business has grown significantly, with more than 70
branches throughout the Afghanistan. Our substance is proven
by our ability to serve the needs and aspirations of our
clients, as we blend our banking experience with Shariah-compliant
expertise, professionalism and strategic insights, which
ranked 1st amongst licensed Islamic Banking Windows in
Afghanistan. We aim to keep top 1st position in the future
by launching new products into the market for individuals,
businesses, NGO’s, Afghan citizens and foreigners.
Islamic Banking offers financing for corporate entities,
consumer finance (home/property financing, car financing,
other asset/commodity and trade financing), and plans to
offer investment services for approved projects in the
country or abroad, shortly as a part of our Strategic
Low-risk funds based on short-term murabaha (cost + profit)
and ijara (leasing) operations of the banks, in both local
and foreign currencies, would be best suited to risk-averse
savers who cannot afford the possible losses of PLS (profit
and loss sharing) based investments.
Under mudaraba/musharaka (equity-based) funds, banks can
offer a type of equity exposure through specified investment
account where they identify possible investment
opportunities from existing or new business clients and
invite account-holders to subscribe. Instead of sharing in
the bank's profits, the investors share in the profit of the
enterprise in which the funds are placed and the bank takes
a management fee for its work, or bank directly undertake
the investment as an agent for the investment account holder
in mudaraba (profit and loss sharing) base.
The small and medium enterprises (SME) sector has a great
potential for expanding their production capacity, trading
and employment. Islamic Banking Window may introduce SME-financing
funds for various places in Afghanistan, enhancing the role
of the financial sector in the development of the SME which
can mitigate the serious problems of unemployment and the
high level of dependence of imports of goods and services to
Afghanistan in the future.
Based on Islamic financial profit and loss sharing contracts
(mudaraba/musharaka) and buy/sell/hire assets on a fixed
return contracts (murabaha, ijara, istisna, salam), Islamic
Banking Window of the New Kabul Bank can bring innovation
and be a leader in helping the economic development and
growth. Most appropriate contract with low risk that will be
launch soon is murabaha financing (cost plus profit) car,
house, equipment (machinery) or trade financing.
Aims, Objectives and Functions of
provide Interest-free banking on the basis of Shariah-compliant
play the role of a good corporate in national economic
development and growth.
offer contemporary financial services appropriate for
Afghanistan in conformity with Islamic Shariah.
maintain current, savings and investment accounts.
offer corporate financing and investment services
extend consumer financing, Property/House finance, Credit
extend other banking services.
manage wealth of individuals and firms (SME).
offer Gold (Dinar) and Silver (Dirham) services (buy/sell,
safe-keep fee charge) for purpose of hedging or inflation.
invest its funds inside Afghanistan and abroad in Shariah-compliant
safe and sounds projects.