Afghans race to withdraw funds from accounts

Kabul: Nervous Afghans yesterday continued pulling funds out of the nation's largest bank despite assurances from government leaders that their money was safe.

Crowds gathered at Kabul Bank branches around the capital to withdraw dollar and Afghan currency savings, with customers saying they had lost faith in the bank's solvency following a change in leadership and reports that tens of millions of dollars had been lent to political elites for risky real-estate investments.

"Kabul Bank has lost the trust of the people. Even the chairman resigned so all the people are concerned," said Mohammad Nawaz, head of an Afghan aid group who had been trying for three hours to withdraw the $15,000 (Dh55,170) in his account.

The bank run that began earlier in the week undermines efforts by the central government to build an efficient political and financial system to drag Afghanistan out of its dire poverty.

Problems at the bank could have wide-ranging political repercussions since it handles the pay for Afghan public servants, soldiers and police in the unstable nation beset by a Taliban insurgency, widespread drug trafficking and the plundering of aid money.

The New York Times and The Wall Street Journal reported on Wednesday that Kabul Bank's losses could exceed $300 million — more than the bank's assets.

On Thursday, President Hamid Karzai reassured anxious bank customers, saying every penny of their deposits would be guaranteed by the government.

"The Kabul Bank is safe," Karzai said in comments echoed by the country's central bank governor.