1. OVERVIEW The Organized Financial Sector

2. The Informal Sector Anawat Salaam: common in poppy growing Commodity credit Family and kinship groups: most common Hawala System

3. Commercial Banks International One branch each in Kabul – limited expansion plans National Bank – Pakistan some trade credit Habib Bank – Pakistan Punjab National Bank – India planning trade, construction credit Standard Chartered Bank

4. Commercial Banks Afghan Afghanistan International Bank One branch in Kabul – plan 7 Range of services RAMP supported ag enterprise lending - $50,000 to $100,000 (5 in Nov) Kabul Bank One branch in Kabul – commercial bus.

5. Commercial Banks Afghan First MicroFinanceBank One branch in Kabul – plan 25 October 2004: 2200 active borrowers ($2 million portfolio) Core business: microfinance Aryan Bank BRAC Enterprise Bank

6. State Owned Banks Three ‘re-licensed’ (provisional) Milli Bank – Ministry of Finance Pashtani Bank – Ministry of Finance Export Promotion Bank – Ministry of Labor and Social Affairs Solvent, branches and staff exist (?), not operational yet

7. State Owned Banks Three – no decision yet Agriculture Development Bank Mortgage and Construction Bank Industrial Development Bank Insolvent, branches and staff (?), not operational

8. Other Issues Leasing RAMP backed plan for ARC February 2005 start? No NBFI law Da Afghanistan Bank Phase out banking operations

9. Microfinance October 2004 Active savers:80,000 Active borrowers:60,000 Outstanding portfolio:$6 million Provinces:17 Districts:78

10. Market Penetration – as of Oct 04 Kabul Balkh Herat Badakhshan Badghis Bamyan Ghazni Laghman Paktia Wardak Jawzjan Kapisa Nangarhar Parwan Samangan Kunduz Baghlan Kunar > 10,000 Clients 1,000 – 10,000 Clients < 1,000 Clients No Significant MFI Activities

11. Microfinance Demand: high Loan sizes: $80 to $2000 Agriculture: 25% of all loans Methodologies: group, village banking, individual, credit unions Clients: primarily women Repayment: 98% on time

12. Microfinance Product Diversification and Research Agriculture: RAMP funded – new approaches Opium indebtedness: experiment Housing: market research and design Disabled persons: market study and strategy design Nomadic people: planned market study

13. Microfinance Projections Estimated market: 1 million + Outreach: 600,000 active borrowers by 2008 Continued product diversification Focus on financial sustainability Linking with commercial sector

14. Challenges and Constraints Ongoing conflict in some regions Absence of laws to support financial sector growth Local staff and organization capacity to be built Need strong financial sector: demand led, organic growth, long-term perspective Vision: integrated, inclusive financial sector