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The International Finance Corporation has signed an agreement with the Aga Khan Fund for Economic Development SA to invest in The First MicroFinanceBank of Afghanistan (FMFB-A), which was recently incorporated as the first full-service financial institution in Afghanistan.FMFB-A will provide credit and savings products to small businesses. The agreement marks IFC's first investment in Afghanistan since 1973.

Ishrat Hussain, Pakistan's central bank governor, expects to see a significant shift in the pattern of banking across the country after the successful privatisation of Habib Bank, one of Pakistan's three largest public sector banks.The sale of 51 per cent of Habib Bank's stock to AKFED (Aga Khan Fund for Economic Development) for $400 million in Pakistan's largest bank privatisation ever has set the pace for policy makers such as Hussain to claim that banking has returned to the private sector.

Over the next few weeks Afghanistan's banking sector will move from comprising just six rundown specialist banks to one where several international commercial operations compete for business -- with perhaps even an ATM machine around the corner.
The National Bank of Pakistan is the only foreign bank operating in the country, but competition is building with First Micro Finance Bank, majority-owned by the Agha Khan Fund for Economic Development, and British-based Standard Chartered preparing to open soon.