Financial Supervision Department


In late 2003, following the enactment of DAB Law and Banking Law, Financial Supervision Department (FSD) established to discharge the DAB regulatory responsibilities. Parallel with the growth and evolution of the activities in the banking sector, the FSD has also undergone major growth over the last decade. In 2003, the FSD used to consist of only 12 employees most of whom did not have banking supervision experience. During the following years, major efforts were exerted to increase the staff number and enhance the staff quality.  A hiring program was launched to increase the FSD staff and was coupled with an intense training program, including online courses, on-the-job training and classroom instruction, both domestically and internationally. Training focused on a variety of relevant banking supervision topics, including: financial analysis; credit analysis; liquidity management; laws and regulations; asset/liability management; and computer skills. Between 2003 and 2008, banking laws and regulations were enacted, basic bank reporting requirements were established, on-site examinations were begun on a yearly cycle, and a quarterly offsite financial review process was begun. Initial policy and procedural manuals were developed for on-site examinations and supplemented with a training program.

Currently FSD has 165 professional staff members who supervise financial system of the country including banks, Money Service Providers (MSPs), Foreign Exchange Dealers (FXDs), and Electronic Money Institutions (EMIs)


To have a Regulatory and supervisory framework aligned with international standards and best practices, thus enabling effective oversight over the financial system in Afghanistan.


To have a stable and sound financial system in Afghanistan where banks and financial institutions provide conventional and Islamic banking products and services according to well established policies and procedures and based on good governance practices.

Duties and Responsibilities:

Financial Supervision Department, in addition to licensing banks and non-bank financial institutions including MSPs, FXDs, and EMIs, it is also conducting On-Site examination, and Off-Site analysis and surveillance, takes corrective and enforcement actions as well as fines on those banks  and other financial institutions which breach the banking law, DAB law, regulations, and procedures. Banks are evaluated and rated through CAMEL rating system.

Structure and Tasks:

The present organizational structure of Financial Supervision Department is comprised of 173 positions including 8 non-administrative workers and house keeper. The department is headed by the director general that has three deputies for the following divisions:

  1. General Supervision Division;
  2.  Regulatory Affairs Division; and
  3.  Islamic Banking Division.

Besides, there are two more positions which are advisory bodies subordinating Director General  of Financial Supervision Department for consultancy on Conventional and Islamic banking. Moreover, an On-site Coordinator exists in the structure which reports to Deputy Director General for General Supervision.

1. General Supervision Division
The division is headed by the Deputy General Director for General Supervision and covers On-Site supervision and Off-Site analysis and surveillance.

A. On-Site Supervision: This section is comprised of eight supervisory on-site teams out of which four teams curry eight examiners, one deputy and one team leader. However; four other teams are composed of four examiners, one deputy, and one team leader.  On-site Supervision teams assess and supervise banks according to the scope of examination in accordance to their job description, and then rate the assessed areas and the bank in the scale of 1 to 5 for quality of performances. The On-site Supervision involves examination of banking operations which include evaluation of Capital, Asset Quality, Management, Earnings, and Liquidity, along with FX Position; Interest Rate Sensitivity, and AML/CFT issues.

In addition to the aforementioned staff of General Supervision Division, there are two IT examiners in the structure of this division to assess the bank system and IT issues. Moreover, there are six zonal examiners and six staff members in the structure who help the general supervision and regulatory affairs divisions on assessing banks branches in provinces, as well as foreign exchange dealers and money service providers in six provincial zones of Da Afghanistan Bank.

B. Off-Site Analysis: This part is comprised of Off-Site analysis and surveillance, and accounting & reporting sections.

 The accounting and reporting section is consisted of one section manager, one deputy section manager and four staff members. The section receives and reviews banks financial reports on monthly, quarterly and annual basis and chicks for conformity with the reporting format required by Da Afghanistan Bank (DAB). In case, misreporting or material mistakes are found, then, the section enforces charges on the violent bank in accordance with DAB laws and regulations.

The Off-site analysis and monitoring section is headed by the section manager, and consisting one deputy manager and eight staff members. The section is engaged in analyzing and evaluating the financials of banks and reports to the Deputy General Director of Financial Supervision Department. The analysis took place based on the call reports and given figures and statistics by banks, in order to make use of it in the coming On-site examinations.

2. Regulatory Affairs Division

The division is headed by the Deputy General Director for regulatory affairs include the following six sections:

  1. Licensing: This section is consisted of one section manager, one deputy manager and six staff members who are engaged in processing and issuance of license to financial institutions. The main tasks of the section are to collect necessary documents for evaluation of bank shareholders and boards, review bank business plan;  policies and procedures prior to issuing license and conduct interviews for  approving/rejecting senior management including CEO and chief officers, supervisory board members, and audit committee members. The section also organizes all relevant affairs regarding the licensing including fees.
  2. Special Supervision/Enforcement Section: This section reviews on-site reports and major changes in off-site analysis. Subsequently, takes action mostly on the banks rated from 3 to 5 to resolve the issues, and enforces corrective and enforcement actions including fines on the violent banks which have breached the laws, regulations and DAB requirements. This section also conducts On-Site supervision in targeted areas to track the identified issues and follow up the corrective actions.
  3. Regulations Section: Regulations section has one section manager, one deputy manager and four staff members and functions for regulatory framework of Financial Supervision Department.
  4. Anti-Money Laundering and Combating Financing of Terrorism Section: This section is headed by the section manger and further is comprised of two subsections including sections for Banking and Non-Banking Institutions, each subsection has a deputy section manager and six staff members. The section holds responsibility to assess and monitor banks and other financial institutions including foreign exchange dealers and money service providers on money laundering issues.
  5. Electronic Money Institution: This unit has a section manager, a deputy section manager and four staff members that verify and assess relevant documents, collect and organize relevant fees, and conduct on-site and off-site supervision for EMIs.
  6. Research and Development Section: This section has one section manager, one deputy manager and tow staff members, the section conducts research and statistical data collection for Financial Supervision Department.

          3. Islamic Banking Division

The Islamic banking division is headed by the deputy director general for Islamic banking and is comprised of the three following areas:

  1. On-Site Supervision
  2. Off-Site Monitoring and Analysis
  3. Research & Compliance with Shariah Law

Currently On-site supervision section has a section manager, deputy section manager and three examiners. Off-site section is run by a manger and one analyst. And Sharia Compliance and Research section is driven by a manager, deputy manger and one compliance officer.

All sections of Islamic banking perform similar duties as mentioned above in the conventional part, but the duties cover only Islamic banking affairs including on-site and off-site supervision, as well as Sharia compliance.