The Islamic Bank of Afghanistan (IBA) was officially launched on Tuesday – the first fully-fledged Islamic Bank in the country.

IBA is now the only bank in Afghanistan where all its services are based on Islamic laws.

The IBA was previously known as Bakhtar Bank and operated under a conventional banking license since it was acquired by Azizi Bank in 2009.

The central bank, Da Afghanistan Bank, granted IBA an Islamic Banking license on April 9 after it completed the conversion of its balance sheet, said Faizan Ahmed, chief financial officer and member of the IBA management board.

Chief Executive Abdullah Abdullah said on Tuesday at the launch ceremony that Islamic Banks will encourage people to open accounts, which will play a significant role in growing the country’s economy.

Abdullah said Islamic banking should be managed correctly to ensure people gain confidence in the system.

“Every resident of the country should get familiar with banking services and systems and use the services, because it will help in economic growth,” said Abdullah.

“Without any doubt, the commencement of banking operations of the first fully-fledged Islamic Bank encourages the Muslim nation to retain their capital in funds that have remained outside the banking circle. And they have confronted numerous issues to preserve their money. They would now be able to effortlessly deposit their money in a Islamic Bank of Afghanistan (account),” IBA CEO Amer Khalil-ur -Rehman said.

Afghan Banking Union officials meanwhile said the banking sector has increased in the past few years, and a number of state-owned and private banks have been established. However only 11 percent of the people deposit their money into bank accounts.

According to the union officials, the lack of Islamic banking services could have been one of the reasons why so many people have not opened accounts.

Currently seven banks offer some Islamic banking services, but IBA is the first to deliver full Islamic banking services.