International Business: UN warns of ‘colossal’ collapse of Afghan banking system – Gulf Digital News

International Business: UN warns of ‘colossal’ collapse of Afghan banking system – Gulf Digital News

UNITED NATIONS: The United Nations on Monday pushed for urgent action to prop up Afghanistan's banks, warning that a spike in people unable to repay loans, lower deposits and a cash liquidity crunch could cause the financial system to collapse within months.

In a three-page report on Afghanistan's banking and financial system seen by Reuters, the UN Development Programme (UNDP) said the economic cost of a banking system collapse - and consequent negative social impact - "would be colossal."

An abrupt withdrawal of most foreign development support after the Taliban seized power on Aug. 15 from Afghanistan's Western-backed government has sent the economy into freefall, putting a severe strain on the banking system which set weekly withdrawal limits to stop a run on deposits.