Islamic Banking Department

Islamic Banking and Financial Services Department is one of the key departments of Da Afghanistan Bank which was established pursuant to DAB's High Council approval number 42 of 28/9/1397. Earlier, this department was one of the deputy directorates of Financial Supervision Department.

Since its establishment, the department has been contributing to the growth and development of the Islamic banking sector of the country and playing an active role in implementing Shariah standards in regard to Islamic banking activities. Even though, Islamic banking and financial services are still considered new experiences in Afghanistan's financial and banking system, reviews of the Islamic banking in the past years show that Islamic banking is growing and its scope is expanding day by day.  The government of the Islamic Republic of Afghanistan is working to prepare the Sukuk and Takaful Law. When enacted, the law will pave the grounds for further access to the Islamic financial services.

Islamic Banking and Financial Services Department is also responsible for managing the affairs of the secretariate of Da Afghanistan Bank's Shariah Supervisory Board described as under;

Shariah Supervisory Board

Shariah Supervisory Board is the only highest decision making and Fatwa issuing body concerning the Shariah related affairs of the Islamic banking and financial services at the national level.   The board is established as an independent body in the organizational structure of Da Afghanistan Bank for the purpose of reviewing and approving the regulations, manuals and policies of Islamic banks and Islamic banking windows in the light of Shariah. As the highest decision making body onShariah related affairs of the Islamic banking, Da Afghanistan Bank, and Islamic Banking and Financial Services, the board cooperates in regard to the compliance of the activities of Islamic Banks and Islamic banking windows with Shariah principles.

Vision

Access to a comprehensive, effective and transparent Islamic financial system which shall play its role in economic growth, social welfare and sustainable development of the country.

Goals

  • Strengthening and improving the growth of Islamic banking and financial services sector by providing a legal and regulatory framework, capacity building, public awareness, attracting international organizations to domestic market and preparing effective liquidity  and financial stability tools based on supervision of the activities of banks and Islamic banking windows
  • Standardizing the activities of Islamic banks and Islamic banking windows in accordance with the accepted international standards to provide quality Islamic banking services and products suitable for the living conditions of the people.
  • Stabilizing the financial sector of the country through professional, comprehensive and effective supervision of the activities of Islamic banks and Islamic banking windows of conventional banks of the country.
  • Paving the grounds for attracting huge funds to the country which areleft unrecordedin the financial system of the country due to various reasons.
  • Increasing the level of financial inclusion in the country by designing and providing Islamic banking products and services.

Duties and responsibilities:

The duties and responsibilities of the Islamic banking and Financial Services Department are as under:

* Preparing and compiling regulations, guidelines, product design, Shariah parameters and circulars related to the Islamic banking, and reviewing and modifying them whenever required and deemed necessary.

* Conducting on-site and off-site supervision of the Islamic banks and Islamic banking windows in accordance with banking law, relevant plans and internal policies of the Islamic banks and Islamic banking windows.

* Conduct dedicated follow-up and targeted supervisions whenever deemed necessary

* Preparing and arranging Da Afghanistan Bank's strategic plans and programs for the development of the Islamic banking sector and reviewing and renewing these programs and strategies when required.

* Establishing enforcement measures and conditions applied to Islamic banks and contributing to the application of enforcement measures and conditions on Islamic banking windows.

* Managing the Secretariat of DAB’s Shariah Supervisory Board and assigned tasks.

• Participation and cooperation in activities relating to the approval of licensing of the Islamic banks and Islamic banking windows of conventional banks which include the review of the related documents, the key authorities’ documents, and participation in their interview committee.

* Participation in meetings, workshops and seminars at home and abroad on Islamic banking topics on behalf of Da Afghanistan Bank

* Responding to various internal and external letters related to Islamic banking in accordance with the instructions of DAB's leadership

* Organize or participate in meetings with senior members of banks or other relevant institutions to solve issues related to banking and Islamic banking services

Organization Chart

The current organization chart of the Islamic Banking and Financial Services Department is composed of 46 positions.  The organization chart contains one Director and two Deputy DirectorPositions in the following sections;

1. Deputy Directorate of Research, Regulatory and Shariah Affairs

2. Deputy Directorate of Islamic Banking Supervision

1. Deputy Directorate of Research, Regulatory and Shariah Affairs

The main duty of the Deputy Directorate of Research, Regulatory and Shariah Affairs is to design regulations, guidelines and procedures on Islamic Banking, Islamic banking products, and sukuk & takaful. It's the responsibility of the deputy directorate to review, modify and update the aforementioned regulations whenever required. In addition, it's responsible for regulating the activities associated with the Shariah Supervisory Board and the issues relating to licensing. This deputy directorate contains four sections, described as under;

A- Regulatory Affairs Section

The main duty of this section is to research, prepare and draft regulations, guidelines, procedures, circulars and Islamic banking products. Also, it is responsible to amend the current guidelines and regulations.

B- Shariah Affairs Section

It's the responsibility of this section to revise and review the policies, Islamic banking products and guidelines of the banks and Islamic banking windows before presenting the aforementioned to the Shariah Supervisory Board of Da Afghanistan Bank. This section also bears the responsibility to arrange and organize meetings of the Shariah Supervisory Board.

C- Sukuk and Takaful Section

In order to promote non-banking affairs such as sukuk and takaful, this section is established as a separate management section under the deputy Directorate of Research, Regulatory and Shariah Affairs.

D-Licensing Section:

The main duty of this section is to review and analyze requests pertaining to the establishment, development and changing of the location of branch offices, and Islamic banks and banking windows facilities. It's also the duty of this section to analyze, evaluate and process the applications of Islamic banks and Islamic Banking Windows.

2. Deputy Directorate of Islamic Banking Supervision

The main task of the Deputy Directorate of Islamic Banking Supervision is to conduct on-site and off-site supervision and implement enforcement measures on Islamic Banks and Islamic Banking Windows of the licensed banks of the country. This section has three sections described as under;

A- On-Site Supervision Section

This section is responsible to conduct on-site supervision of the Islamic Banks and Islamic Banking Windows to ensure compliance of their activities with the applicable Islamic banking laws and regulations.

B- Off-Site Supervision Section

The section is responsible for collecting financial reports, and reviewing and analyzing such reports to ensure compliance with international accounting standards.

C- Enforcement Measures and Special Supervision

The main duty of this section is to conduct special on-site supervision (follow-up and targeted) of the Islamic Banks and Islamic banking windows and implement corrective measures in relation to such entities.