Announcement

Mortgage Law and Movable Property Law Increase Access to Finance

Even a modest increase in home sales and home mortgages will have a positive multiplier effect, leading to higher levels of employment, per capita income, and tax revenue.

Kabul, Afghanistan  | Friday, July 31, 2009

Mortgage lending in Afghanistan has been long constrained because of a poor legal framework. Financing was available to only a small fraction of the population and banks were unable to improve yields on larger loan portfolios.  On June 8, President Karzai signed and enacted the Law on Immovable Property in Banking Transactions, which governs mortgages, following its passage by Parliament.  The law was drafted by the Da Afghanistan Bank Office of General Council in consultation with the Afghanistan Banks Association and USAID-funded technical advisors.

The Mortgage Law presents exciting financing opportunities and will open new doors for banks, home owners, businesses, and investors in Afghanistan’s economy.  Even a modest increase in home sales and home mortgages will have a positive multiplier effect on the industrial, service, and consumer goods sectors, leading to higher levels of employment, per capita income, and tax revenue. 

The President and Parliament also passed the Secured Transactions Law for Movable Property, which governs bank financing, long term leases, vendor sales and consignment sales of movable property. Implementation will broaden access to financing and allow banks and other credit providers to expand their portfolios.  The law will also protect collateral rights and improve enforcement in the event of a default, while protecting the interests of borrowers.  The passage of these two laws shows that Afghanistan is on its way to developing a modern legal framework for property ownership and sales.