Afghanistan0000Report000Sequence007

The World Bank Implementation Status & Results Report
Financial Sector Rapid Response Project (P119047)
1/10/2016 Page 1 of 7
Public Disclosure Copy
SOUTH ASIA | Afghanistan | Finance & Markets Global Practice |
IBRD/IDA | Specific Investment Loan | FY 2012 | Seq No: 7 | ARCHIVED on 10-Jan-2016 | ISR21682 |
Implementing Agencies: DA AFGHANISTAN BANK
Key Dates
Key Project Dates
Bank Approval Date:25-Aug-2011 Effectiveness Date:06-Sep-2011
Planned Mid Term Review Date:04-Oct-2014 Actual Mid-Term Review Date:25-Apr-2015
Original Closing Date:30-Jun-2014 Revised Closing Date:30-Jun-2016
Project Development Objectives
Project Development Objective (from Project Appraisal Document)
The Project's development objective is to assist DAB to develop actions plans for improved banking supervision and implementamodernnational
payment system for efficient and transparent payment transactions.
Has the Project Development Objective been changed since Board Approval of the Project Objective?
Yes
Board Approved Revised Project Development Objective (If project is formally restructured)PHRPDODEL
To assist DAB to develop action plans for improved banking supervision and to establish key building blocks of financial sector infrastructure:
payment system, movable collateral registry, and public credit registry.
Name Previous Rating Current Rating
Progress towards achievement of PDO  Moderately Satisfactory  Moderately Satisfactory
Overall Implementation Progress (IP)  Moderately Satisfactory  Moderately Satisfactory
Overall Risk Rating  High  High
Components
Name
Strengthening the DAB's capacity:(Cost $8.00 M)
Development of the financial sector infrastructure:(Cost $14.70 M)
Technical assistance and training for project implementation:(Cost $3.00 M)
Overall Ratings

1/10/2016 Page 2 of 7
Implementation Status and Key Decisions
The project is implemented by the Central Bank of Afghanistan (Da Afghanistan Bank, DAB). The project supports (i) audits (financial, portfolio and
institutional) of ten commercial banks operating in Afghanistan and targeted technical assistance to DAB Financial Supervision Department; (ii)
development of financial sector infrastructure. This includes the modernization of the national payment system to facilitate payments within the country,
which involves the establishment of a Real Time Gross Settlement (RTGS), Automated Clearing House (ACH) and Central Securities Depository (CSD),
as one system, at DAB; and a national card and mobile payments switch at Afghan Payments Systems (APS, a consortium of commercial banks). This
also includes continuous support to the Public Credit Registry, Collateral Registry and Afghanistan Institute of Banking and Finance; and (iii) technical
assistance and training for project implementation.
The audits of the ten commercial banks were completed in June 2012, and presentations on the findings of the audits were given in June and July 2012
to development partners. The procurement process for targeted technical assistance to DAB Financial Supervision Department is underway.
The Collateral Registry (CR) and the Public Credit Registry (PCR) became fully operational in 2013 and 2014 respectively. This is a significant
achievement. CR is now utilized by all commercial banks and four microfinance institutions. DAB also indicated that as of end June 2015, more than
108,000 credit records were registered in the PCR system, of which around 40% records are for women. The PCR was well received in the Afghan
financial sector as a significant step forward to circumvent bureaucracy within financial institutions, reduce the cost of access to credit and systematic
risk. Stakeholders also recognized the role of the CR and PCR in bridging the credit information gap in the country.
The Automated Transfer System (ATS) that includes Real Time Gross Settlement System (RTGS), Automated Clearing House (ACH) and Centralized
Securities Depository (CSD) is well progressing. It is meant to modernize the national payment system for efficient and transparent payment
transactions. The ATS and its sub-components will reflect on enhancing financial intermediation and enabling safety and efficiency of the financial
system. It will also facilitate financial inclusion and service delivery and outreach through building the required infrastructure for more efficient payment
services. The procurement of the (ATS) is underway as the draft contract between DAB and the awarded firm was initialed, the draft was reviewed and
approved by the Bank and the National Procurement Authority and is now being finalized to move ahead with implementation.
The Afghan Payment System (APS) component is now entering the User Acceptance Testing (UAT) phase; the APS team should expedite the other
critical activities identified in the MTR to be completed before Go-Live. The APS will ensure interconnecting Afghan Banks (participants) with the main
datacenter in Kabul and the Dubai backup data center. Once the APS is operationally ready, it will serve its potential participants in terms of being able
to bring their ATMs, Point of Sale (POS) terminals, agents and cards on to the APS platform. Accordingly, enhance the efficiency of electronic
payments, reduce transaction costs and foster financial intermediation. The switch should go live by end December 2015.
DAB senior management is committed to reforming AIBF, a consultant was hired to advice on the reform action plan that was presented to AIBF’s
Board of Directors (BoD) in July 2015. DAB is currently appointing an able and competent Executive Director who will be mandated by AIBF BoD to fully
adopt the reform plan. This will be finalized by end of December 2015.

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Risks
Systematic Operations Risk-rating Tool
Risk Category Rating at Approval Previous Rating Current Rating
Political and Governance  --  High  High
Macroeconomic  --  High  High
Sector Strategies and Policies  --  High  High
Technical Design of Project or Program  --  Substantial  Substantial
Institutional Capacity for Implementation and
Sustainability
 --  Substantial  Substantial
Fiduciary  --  Substantial  Substantial
Environment and Social  --  Low  Low
Stakeholders  --  Substantial  Substantial
Other  --  --  --
Overall  --  High  High
Results
Project Development Objective Indicators
PHINDPDOTBL
 Actions plans developed, with initial implementation monitored,for the ten banks audited (Text, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Value No action plan
Targeted TA on
banking supervision
under procurement
Targeted TA on banking
supervision under
procurement
Action plans
under
implementation
Date 01-Aug-2011 02-Jun-2015 07-Oct-2015 30-Jun-2016

1/10/2016 Page 4 of 7
PHINDPDOTBL
 Payment system conforms to international norms (Text, Custom)
Value Not conform Not conform Not conform Conform
Overall Comments
Intermediate Results Indicators
PHINDIRITBL
 Audit reports completed highlighting strengths and weaknesses of each bank (Text, Custom)
Value
No audit
reports to
international
standards
Audits completed Audits completed
Audits
completed
PHINDIRITBL
 RTGS operational and transactions settled in real time by end of project (Text, Custom Breakdown)
Value No RTGS No RTGS No RTGS
RTGS
operational
PHINDIRITBL
 Number of commercial banks’ staff trained in AIBF reaches 4,500 by end of project (Text, Custom Breakdown)
Value 1017 4235 4235 4500
Date 01-Aug-2011 02-Jun-2015 02-Jun-2015 30-Jun-2016

1/10/2016 Page 5 of 7
PHINDIRITBL
 Effective Financial SupervisionDepartment (FSD) organization with training processes in place toensure sustainable
capacitydevelopment (Text, Custom)
Value
Revised FSD
organization
approved by
DAB
Procurement of TA for
Financial Supervision
Department underway
Procurement of TA for
Financial Supervision
Department underway
Continuous
implementation
of action plan
Date 01-Nov-2013 02-Jun-2015 02-Jun-2015 30-Jun-2016
PHINDIRITBL
 Approval by DAB of financial sector regulations ensuring consistency with international standards (Text, Custom)
Value
Afghanistan financial
sector regulations not fully
aligned with international
standards
Banking law under
review at Parliament.
Regulations will be
finalized after approval
of the banking law. TA
for Financial
Supervision
Department under
procurement
Banking law under
review at Parliament.
Regulations will be
finalized after approval
of the banking law. TA
for Financial Supervision
Department under
procurement
Key regulations
approved
Date 01-Nov-2013 02-Jun-2015 02-Jun-2015 30-Jun-2016
PHINDIRITBL
 Interbank payment (Text, Custom)
Value
T+1 for Kabul area and
T+3 for other areas
T+3 for other areas
T+3 for other areas
Same day all
over
Afghanistan
PHINDIRITBL
 Card payment system (Text, Custom)
Value No interbank card system
Implementation of
interbank card system
underway. Switch to go
live by end December
2015.
Implementation of
interbank card system
underway. Switch to go
live by end December
2015.
System
operational

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PHINDIRITBL
 Rating of national payment system (Text, Custom)
Value
Low: a, e, f; Med-low: d;
n.a. b, c
Low: a, e, f; Med-low:
d; n.a. b, c
Low: a, e, f; Med-low: d;
n.a. b, c
Med-High: a, b,
d, f; Med-Low:
c, e
PHINDIRITBL
 Increase in the number of creditreports sent by the Public Credit Registry to commercial banks (Number, Custom)
Value 0.00 1370.00 1370.00 25000.00
Date 01-Nov-2013 02-Jun-2015 07-Oct-2015 30-Jun-2016
PHINDIRITBL
 Increase in the number of items of collateral registered in the Collateral Registry (Number, Custom)
Value 815.00 3687.00 3687.00 2000.00
Date 01-Nov-2013 02-Jun-2015 07-Oct-2015 30-Jun-2016
Overall Comments
Data on Financial Performance
Disbursements (by loan)
Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed
P119047 IDA-H7320 Effective XDR 11.90 11.90 0.00 6.66 5.24 56%
P119047 IDA-H8930 Effective XDR 4.40 4.40 0.00 1.76 2.64 40%
Key Dates (by loan)

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Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date
P119047 IDA-H7320 Effective 25-Aug-2011 27-Aug-2011 06-Sep-2011 30-Jun-2014 30-Jun-2016
P119047 IDA-H8930 Effective 26-Nov-2013 10-Mar-2014 04-Jun-2014 30-Jun-2016 30-Jun-2016
Cumulative Disbursements
Restructuring History
Level 2 Approved on 26-Jan-2015
Related Project(s)
P147624-Additional Financing to Financial Sector Rapid Response Project

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