KABUL - Acting central bank governor said on Saturday the country's second-biggest private bank was not in crisis and warned lawmakers that raising fears about its future could spark panic.
Mohebullah Safi appeared before parliament at the request of lawmakers, some of whom suggested this week that Azizi Bank was facing the same fate as the country's biggest private bank, Kabul Bank, which collapsed earlier this year.
Kabul Bank has around $926 million of outstanding loans, and Western officials in Kabul now openly refer to it as a Ponzi scheme. Safi told parliament that Azizi Bank "wasn't in a crisis situation before, and isn't now." He added that the bank had $588 million in reserves which were safe.
"I need your cooperation regarding Azizi Bank," Safi said. "We all know that many Afghans are illiterate and have accounts in banks and we shouldn't panic them, which could damage our national interest."
The troubles at Kabul Bank, at the time Afghanistan's biggest private bank, sparked a run on branches around the country earlier this year as customers rushed to retrieve savings they feared were at risk of vanishing. There have been no signs of similar disorder at Azizi Bank branches.
A spokesman for Azizi Bank told Reuters on Monday that speculation the bank was in trouble was "absolutely false" and that its liquidity "is very strong".
Safi also asked parliament to amend the country's banking laws to allow the central bank to monitor investments made by Afghan banks and their shareholders both at home and abroad.
"Based on banking laws, we can only monitor the banks themselves, but we can't monitor their other related businesses and shareholders," said Safi. (Reuters)