Project Data Sheet

Project Data Sheets (PDS) contain summary information on the project or program: Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

PDS Creation Date 17 Feb 2006
PDS Updated as of 24 Sep 2014

Project Name AFG: AFGHANISTAN INTERNATIONAL BANK
Borrower/Equity Investment Name AFGHANISTAN INTERNATIONAL BANK
Country Afghanistan
Project/Program Number 37903-014
Status Approved
Geographical Location Kabul
In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
Sector Finance
Subsector Banking Systems
Strategic Agendas
Drivers of Change
Gender Equity and Mainstreaming Categories

Project Sponsor

AFGHANISTAN INTERNATIONAL BANK

Financing

Type/Modality of Assistance Approval Number Source of Funding Approved Amount (thousand)
PS7199Direct Investment
(Fully Disbursed)
USD 2,602

Safeguard Categories

For more information about the safeguard categories, please see http://www.adb.org/site/safeguards/safeguard-categories

Environment FI

Summary of Environmental and Social Issues

Environmental Aspects
AIB is classified as a financial intermediary based on ADB's Environment Policy, which requires AIB to (i) adhere to ADB's Environment Policy and Environmental Assessment Guidelines, (ii) adhere to ADB's policies on involntary resettlement and indigenous peoples, and (iii) acknowledge that all borrowers comply with Afghanistan's health, safety, and environmental regulations and standards, and public consultation requirements. AIB has complied with these policies and no breach has occured. AIB also has environmental due diligence policies and procedures that are embedded in its documents, specifically in its artictles of association and credit policy. The bank's enviromental management system (EMS) includes an exlusion list of prohibited industries, which is an integral part of its credit risk management. AIB conducts environmental due diligency, and applies the equator principles in relation to its EMS. It has complied with ADB's social safeguard policies and no involuntary resettlement or impact on indigenous peoples resulted from its activities.
Involuntary Resettlement
No involuntary resettlement resulted from its activities.
Indigenous Peoples
No impact on indigenous peoples resulted from its activities.

Stakeholder Communication, Participation and Consultation

Description

The Project is to create one of Afghanistan's first private financial institutions. AIB will provide a range of financial services - including credit and savings, payment transfers, trade finance and SME lending. The bank will also aggressively market to NGOs and donor organizations as potential clients in order to support the efficient and secure mobilization of the capital necessary to facilitate Afghanistan's reconstruction efforts.

Objectives and Scope

The establishment of AIB is expected to have significant development impact by facilitating the emergence of the financial sector and a demonstration effect through the dissemination of best practice standards, in the development of the commercial banking sector in Afghanistan. AIB's existence early on in the emergence of Afghanistan's economy will facilitate the development of the banking regulatory and supervisory structure since the Central Bank will have daily interaction with bank management that possesses formidable experience in the operation of financial institutions in developing or transitioning economies.

Project Rationale and Linkage to Country/Regional Strategy

The Project is consistent with ADB s strategy for private sector operations, which gives priority to investments in the financial sector.

Outputs and Implementation Progress

Description of Project Outputs
Status of Implementation Progress (Outputs, Activities, and Issues)
Status of Development Objectives
ADB, as a key investor, continues to demonstrate its commitment and support to AIB, helping in the area of corporate governance, risk management, training and supervision through its presence on the Supervisory Board of the Bank. The Board consists of 5 independent members, in addition to 4 representing the shareholders, bringing in line with international best practices.
Status of Operation / Construction
ADB's presence in Afghanistan's finance sector has catalyzed the entry of more international financial institutions (IFIs). Five local banks and six IFIs entered the financial market since 2008. Although the number is quite insignificant relative to foreign entrants in the People's Republic of China or India, the said addition was considered a major milestone for Afghanistan given the bleak business environment after years of war and continuing insurgency. In this regard, private sector development is rated 'excellent'. ADB's assistance had a positive effect on AIB, as evidenced by AIB's good reputation and market position in Afghanistan's finance sector. The bank prioritzed the adoption and implementation of sound corporate governance and stronger internal control policies and procedures. This has helped it gain public trust and confidence, which translated to a remarkable financial performance in 2008. Profitability jumped from a net loss in 2007 to a net profit of AF611.58 million in 2008. The continued strong performance has allowed the bank to pay 100% bonus shares in 2009 and a cash dividend amounting to $10 million in 2010. By the end of 2013, AIB was the largest Private Sector Bank in Afghanistan, with 32 branches, four cash outlets and over 30 ATMs.
Material Changes

Business Opportunities

Date of First Listing
Consulting Services
Procurement and Consulting Notices
http://www.adb.org/projects/37903-014/business-opportunities

Timetable

Concept Clearance 28 Jan 2003
Due Diligence Mission 23 Feb 2004 to 25 Feb 2004
Investment Committee Meeting
Approval 13 May 2004

Contacts and Update Details

Responsible ADB Officer Hasib Ahmed (hahmed@adb.org)
Responsible ADB Department Private Sector Operations Department
Responsible ADB Divisions Private Sector Financial Institutions Division

Links

Project Website http://www.adb.org/projects/37903-014/main
List of Project Documents http://www.adb.org/projects/37903-014/documents