Public Disclosure Copy
The World Bank Implementation Status & Results Report
Financial Sector Rapid Response Project (P119047)
Financial Sector Rapid Response Project (P119047)
SOUTH ASIA | Afghanistan | Finance & Markets Global Practice |
IBRD/IDA | Specific Investment Loan | FY 2012 | Seq No: 9 | ARCHIVED on 07-Feb-2017 | ISR26880 |
Implementing Agencies:
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:31-Oct-2019
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.
Components
Name
Strengthening the DAB's capacity:(Cost $9.00 M)
Development of the financial sector infrastructure:(Cost $29.70 M)
DAB Skill Development; Technical Assistance and project implementation:(Cost $7.00 M)
Overall Ratings
Name Previous Rating Current Rating
Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory
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Public Disclosure Copy
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The World Bank Implementation Status & Results Report
Financial Sector Rapid Response Project (P119047)
Overall Implementation Progress (IP) Satisfactory Satisfactory
Overall Risk Rating Substantial Substantial
Implementation Status and Key Decisions
Two implementation support missions were conducted during (July 21 –August 4, 2016) and (January 13 –28, 2017) to assess implementation
progress, finalize pending procurement issues. DAB's leadership demonstrated strong support to achieving the project's development
objective. The new Additional Financing (AF) was approved by the World Bank’s Board on October 27, 2016. The legal agreement was signed
by the Minister of Finance on January 4th 2017 and the agreement is currently being reviewed by Ministry of Justice as the final step towards
effectiveness. On another front, the parent project’s progress has been maintained during the past six months. Many developments have
taken place that are expected to improve project performance in the coming months.
Component 1: Strengthening of DAB Financial Supervision Department’s (FSD) capacity:
1 . Under this component a firm would be recruited to provide TA to strengthen the capacity of the Financial Supervision Department in the areas of banking
regulation and supervision. The technical evaluation report (TER) was submitted to the task team for no objection on June 26, 2016 identifying two shortlisted
firms to be considered for the next step. The TER was reviewed and the go-ahead was granted on July 12, 2016 to proceed to reviewing the financial proposals as
the final step towards awarding the contract and implementation. NPA advised the team on January 7th 2017 that the contract negotiations process has not yet
been finalized which requires further extension of the proposals validity period for the 4th time January 24, 2017 up to March 21, 2017. The team discussed with
DAB’s leadership the need to expedite the negotiation process and move forward with this critical component and will be closely following up.
1 . Once on board, the consultancy firm will be tasked with the following important activities: (i) stock taking on capacity building efforts on financial supervision
over the last 10 years and development and implementation of a capacity building plan to sustainably strengthen the Financial Supervision Department, (ii)
diagnostic review of the current legal and regulatory landscape and identify the key regulatory reform areas and regulations in need of an update/development.
This is to be followed by a timed action plan that prioritizes / sequences regulations that need to be updated or developed; and (iii) development and
implementation of action plans following audits of commercial banks.
Component 2: Development of the financial sector infrastructure: Support to establishment of Collateral Registry (CR) and Public Credit Registry (PCR):
1 . The Collateral Registry (CR) and the Public Credit Registry (PCR) remains a significant achievement. Since it officially started operations in 2013 and 2014
respectively, CR is now utilized by DAB’s FSD, 15 commercial banks, 4 microfinance institutions as well as the Revenue’s department. The implementation of the
PCR has been undertaken in partnership with IFC Advisory Services. As per a DAB circular issued on November 18, 2014, all commercial banks are mandated to
make an inquiry to the PCR and obtain a Credit Report before issuing a loan.
2 . As of end-November 2016 (after almost three years of operations), DAB indicated that the total number of active contracts in the PCR system reached 62357.
The PCR has been well received in the Afghan financial sector as a significant step forward to circumventing bureaucracy within financial institutions, as well as
reducing 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. Although much more needs to be done in enhancing financial intermediation on the lending side by banks, the establishment of the CR and PCR is
fundamental to sound financial market development and as economic activity picks up, will serve to establish a valuable service that can greatly facilitate the
development of credit markets over time. On the other hand, the public searches on CR by end November 2016 has reached 14609 with total value of active
credit limits 24 billion AFN .
3 . CR/PCR is now playing a more active role to scale up its operations, in this respect a meeting was held on 22nd August 2016 with Large and Medium Tax Payers
Directorate at Ministry of Finance in order to increase the registration of Tax Lien notices into CR system. Besides, the CR team has conducted training on
Collateral Registry system for a responsible employee of Medium Tax Payer Directorate on 20th September 2016. Recently, a new user of CR system has been
created for Revenue Collection Department Staff at Ministry of Finance on 20th September 2016. CR/PCR is also in touch with Afghanistan Independent Land
Authority (Arazi) organization on 23rd August 2016 regarding the registry of securing charges on immovable property. The January 2017 ISM discussed CR/PCR
requests for build capacity of its staff and the team will coordinate with IFC advisory in this respect.
4 . Modernization of National Payment Systems: including setting up an Automated Transfer System (ATS), National Card and Mobile Payment Switch
(Afghanistan Payment System) and an Interbank Communication Network: The Modernization of National Payment Systems included financing the setup of ATS
which entails the Real Time Gross Settlement System (RTGS), Automated Clearing House (ACH) and Centralized Securities Depository (CSD). It is meant to
modernize the national payment system for efficient and transparent payment transactions. The ATS and its subcomponents will support enhancing financial
intermediation and enabling safety and efficiency of the financial system. It will also facilitate financial inclusion and service delivery and outreach through
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Public Disclosure Copy
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The World Bank Implementation Status & Results Report
Financial Sector Rapid Response Project (P119047)
building the required infrastructure for more efficient payment services.
5 . The procurement of the ATS was finalized in April 2016 with the signature of the contract between DAB and CMA (the awarded firm). The kickoff meeting was
held in May 2016 and DAB had a detailed technical discussion with CMA on implementation arrangements. The functional specification document (FSD) was
finalized and signed with CMA on December 19th 2016. It was communicated to commercial banks to start preparation to connect their core banking systems to
the ATS as soon as it is operational. The FSD will be published on DAB’s website shortly. The duration of the contract is 13 months and the warranty and post
warranty periods will be eight years after the operational acceptance of the system.
6 . The national card and mobile payment switch is a key component of the modernization of the national payment system. Once fully operational, it will serve its
potential participants in terms of being able to bring their Automated Teller Machines (ATMs), Point of Sale (POS) terminals, agents, mobile money accounts and
cards on to the Afghanistan Payment System (APS) platform that is anchoring this infrastructure. APS is aimed to enhance the efficiency of electronic payments,
reducing transaction costs and fostering financial intermediation through offering interoperability to financial intermediaries and retailers to facilitate electronic
and card payments. All technical operational requirements and testing were concluded by APS team and it was officially inaugurated by DAB’s Governor on April
26, 2016. There are currently 6 participating banks in APS and another bank and a mobile operator are in discussion to join the platform.
Support to the development of the Afghanistan Institute of Banking and Finance (AIBF)
1 . AIBF’s management reported that it adopted 90% of the Organizational Capacity Assessment since January 2016. It is now the sole provider accredited ACCA
courses in Afghanistan and currently acquiring the required accreditation to provide certified internal audit courses. AIBF signed a MoU in December 2016 with
the Indian Institute of Banking and Finance to share expertise, provide specialized quality training courses and facilitate accreditation of training programs.
2 . During the past year, AIBF offered training courses for 1027 professional employees from the banking industry of which around 95 were women professionals.
Component 3: Technical assistance and training for project implementation:
1 . This component focuses on providing technical assistance to support the implementation capacity of APS and DAB. It is meant to complement the
investment in physical equipment financed under component 2 for the modernization of the national payment system. A payment system consultant has
been providing technical inputs to APS, for the switch, and DAB for the RTGS/& ACH (collectively ATS) and /CSD, while a legal consultant has
completed: (i) the assessment of the legal and regulatory framework for the NPS; (ii) the review, with proposed amendments, of APS bye-laws against
the requirements under the financing agreement; and (iii) recommendations for addressing the gaps identified in the legal and regulatory framework
(revisions of Electronic Fund Transfer and Money Service Providers regulations). Support was also provided to ensure that the movable Collateral
Registry managed by DAB is continuing to operate satisfactorily. Finally, this component also covered training for key stakeholders of the project and
operating costs for the Project Implementation Cell.
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 -- -- --
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The World Bank Implementation Status & Results Report
Financial Sector Rapid Response Project (P119047)
Overall -- Substantial Substantial
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
Targeted TA on Targeted TA on banking Action plans
Value No action plan banking supervision supervision under under
under procurement procurement implementation
Date 01-Aug-2011 07-Oct-2015 30-Dec-2016 31-Oct-2019
PHINDPDOTBL
Payment system conforms to international norms (Text, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Substantially
Value Not conform Not conform Not conform
Conform
Date 01-Aug-2011 07-Oct-2015 31-Dec-2016 31-Oct-2019
Overall Comments
Intermediate Results Indicators
PHINDIRITBL
Audit reports completed highlighting strengths and weaknesses of each bank (Text, Custom)
Baseline Actual (Previous) Actual (Current) End Target
No audit reports to Audits
Value Audits completed Audits completed
international standards completed
Date 01-Aug-2011 07-Oct-2015 30-Dec-2016 30-Jun-2016
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The World Bank Implementation Status & Results Report
Financial Sector Rapid Response Project (P119047)
PHINDIRITBL
RTGS operational and transactions settled in real time by end of project (Text, Custom Breakdown)
Baseline Actual (Previous) Actual (Current) End Target
Value No RTGS No RTGS No RTGS RTGS goes live
Date 01-Aug-2011 07-Oct-2015 31-Dec-2016 31-Oct-2019
PHINDIRITBL
Number of commercial banks? staff trained in AIBF reaches 4,500 by end of project (Text, Custom Breakdown)
Baseline Actual (Previous) Actual (Current) End Target
Value 1,017.00 4,850.00 5,000.00 6,000.00
Date 01-Aug-2011 16-Aug-2016 31-Dec-2016 31-Oct-2019
PHINDIRITBL
Increased transparency through the adoption of international central bank accounting and auditing standards (Text, Custom)
Baseline Actual (Previous) Actual (Current) End Target
DAB financial
statements for
the year ended
Financial statements Financial statements in 2018
Value prepared based on local -- prepared based on local prepared in
accounting standards accounting standards accordance
with IFRS (as
applicable in
2016)
Date 16-Aug-2016 -- 30-Dec-2016 31-Oct-2019
Comments
This is related to the new additional financing project that is not yet effective
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The World Bank Implementation Status & Results Report
Financial Sector Rapid Response Project (P119047)
PHINDIRITBL
Effective Financial Supervision Department (FSD) organization with training processes in place to ensure sustainable capacity
development (Text, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Procurement of TA for
Procurement of TA for Continuous
Revised FSD organization Financial Supervision
Value Financial Supervision implementation
approved by DAB Department Under NPA
Department underway of action plan
review
Date 01-Nov-2013 02-Jun-2015 30-Dec-2016 31-Oct-2019
PHINDIRITBL
Percentage increase in the number of on-site and off-site examinations by the department (Number, Custom Supplement)
Baseline Actual (Previous) Actual (Current) End Target
Value 0.00 -- 0.00 10.00
PHINDIRITBL
Approval by DAB of financial sector regulations ensuring consistency with international standards (Text, Custom)
Baseline Actual (Previous) Actual (Current) End Target
A new banking law and A new banking law and
Afghanistan financial AML/CFT regulations AML/CFT regulations
sector regulations not fully were approved. TA for were approved. TA for Key regulations
Value
aligned with international Financial Supervision Financial Supervision approved
standards Department under Department under
procurement procurement
Date 01-Nov-2013 16-Aug-2016 30-Dec-2016 31-Oct-2019
PHINDIRITBL
Interbank payment (Text, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Same day all
T+1 for Kabul area and T+1 for Kabul area and T+1 for Kabul area and
Value over
T+3 for other areas T+3 for other areas T+3 for other areas
Afghanistan
Date 01-Aug-2011 16-Aug-2016 30-Dec-2016 31-Oct-2019
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The World Bank Implementation Status & Results Report
Financial Sector Rapid Response Project (P119047)
PHINDIRITBL
Card payment system (Text, Custom)
Baseline Actual (Previous) Actual (Current) End Target
System goes
Implementation of Implementation of live and, on an
interbank card system interbank card system ongoing basis,
underway. The Afghan underway. The Afghan processes over
Payment system Payment system 80% of
platform was platform was domestic
Value No interbank card system
inaugurated on April inaugurated on April 26, interbank/inter-
26, 2016. Discussions 2016. Discussions institution
ongoing to increase ongoing to increase payment card
number of participants number of participants and mobile
(6 banks) (6 banks) money
transactions
Date 01-Aug-2011 16-Aug-2016 30-Dec-2016 31-Oct-2019
PHINDIRITBL
Rating of national payment system (Text, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Med-High: a, b,
Low: a, e, f; Med-low: d; Low: a, e, f; Med-low: Low: a, e, f; Med-low: d;
Value d, f; Med-Low:
n.a. b, c d; n.a. b, c n.a. b, c
c, e
Date 01-Aug-2011 16-Aug-2016 30-Dec-2016 31-Oct-2019
PHINDIRITBL
Increase in the number of creditreports sent by the Public Credit Registry to commercial banks (Number, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Value 0.00 115,000.00 128,648.00 250,000.00
Date 01-Nov-2013 31-Mar-2016 30-Sep-2016 31-Oct-2019
Comments
This is the latest figure received Jan 20th 2017
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The World Bank Implementation Status & Results Report
Financial Sector Rapid Response Project (P119047)
PHINDIRITBL
Increase in the number of items of collateral registered in the Collateral Registry (Number, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Value 815.00 5,828.00 6,207.00 10,000.00
Date 01-Nov-2013 30-Jun-2016 30-Sep-2016 31-Oct-2019
Comments
This is the latest figure received Jan 20th 2017
PHINDIRITBL
Enhanced operational efficiency of DAB staff : percentage reduction in time spent to prepare DAB balance sheet (Text,
Custom)
Baseline Actual (Previous) Actual (Current) End Target
Value 0.00 -- 0.00 80%
Date 16-Aug-2016 -- 30-Dec-2016 31-Oct-2019
Comments
This is related to the new additional financing project that is not yet effective
PHINDIRITBL
DAB training - Number of key DAB staff trained (Text, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Value 0.00 -- 0.00 1,443.00
Date 16-Aug-2016 -- 30-Dec-2016 31-Oct-2019
Comments
This is related to the new additional financing project that is not yet effective
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Financial Sector Rapid Response Project (P119047)
PHINDIRITBL
Number of DAB staff who have completed or enrolled into a Bachelor or Masters program (Number, Custom Supplement)
Baseline Actual (Previous) Actual (Current) End Target
Value 88.00 -- 0.00 250.00
PHINDIRITBL
DAB training - Percentage of eligible staff in critical functions who completed specialized, professional training sessions
(Percentage, Custom Supplement)
Baseline Actual (Previous) Actual (Current) End Target
Value 0.00 -- 0.00 50.00
PHINDIRITBL
Number of key DAB female staff trained under the project (Text, Custom Breakdown)
Baseline Actual (Previous) Actual (Current) End Target
Value 0.00 -- 0.00 172.00
Date 16-Aug-2016 -- 30-Dec-2016 31-Oct-2019
PHINDIRITBL
Improved sustainability of APS and AIBF (Percentage, Custom)
Baseline Actual (Previous) Actual (Current) End Target
Value 0.00 -- -- 50.00
Date 16-Aug-2016 -- -- 31-Oct-2019
Comments
This is related to the new additional financing project that is not yet effective
Overall Comments
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The World Bank Implementation Status & Results Report
Financial Sector Rapid Response Project (P119047)
Data on Financial Performance
Disbursements (by loan)
Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed
Not
P119047 IDA-D1400 XDR 14.40 14.40 0.00 0.00 14.40 0%
Effective
P119047 IDA-H7320 Effective XDR 11.90 11.90 0.00 7.43 4.47 62%
P119047 IDA-H8930 Effective XDR 4.40 4.40 0.00 1.83 2.57 42%
Key Dates (by loan)
Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date
Not
P119047 IDA-D1400 27-Oct-2016 -- -- 31-Oct-2019 31-Oct-2019
Effective
P119047 IDA-H7320 Effective 25-Aug-2011 27-Aug-2011 06-Sep-2011 30-Jun-2014 30-Jun-2018
P119047 IDA-H8930 Effective 26-Nov-2013 10-Mar-2014 04-Jun-2014 30-Jun-2016 30-Jun-2018
Cumulative Disbursements
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The World Bank Implementation Status & Results Report
Financial Sector Rapid Response Project (P119047)
Restructuring History
Level 2 Approved on 26-Jan-2015 ,Level 2 Approved on 25-May-2016
Related Project(s)
P147624-Additional Financing to Financial Sector Rapid Response Project ,P160073-Financial Sector Rapid Response - Additional Financing
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