Abdul Majid Zabuli: The Bank That Outlived Its Founder

Abdul Majid Zabuli built the first bank in Afghanistan's history, and in doing so he built something rarer and more fragile than a fortune: an institution. Where most of the businessmen in this series are remembered for what they accumulated, Zabuli is remembered for what he founded — the modern banking system of an entire country — and for the way that creation outlived him only by being captured by the state that he had hoped it would serve. His is a story from an older Afghanistan, before the Soviet invasion and the long catastrophe of war, and precisely because it predates the modern scandals it offers a clean view of a problem that runs through the whole of Afghan business history: the precariousness of building anything durable in a country repeatedly upended by coups and regime change.

Zabuli is not a figure of controversy in the way that bankers caught in fraud are. There are no documented scandals attached to his name; his era predates them. The honest critical lens on his life is structural rather than moral, and it is more interesting for being so. It is the story of a private bank handed the powers of a public institution, of an entrepreneur whose creation was first nurtured and then nationalised by the state, and of a builder who ended his very long life in effective exile, directing his bank's affairs from a town in Massachusetts while the country he had tried to modernise was governed by men who had taken his institution for their own. He is, in the most precise sense, a builder whose institution was captured — and that pattern, of private creation absorbed by the state, recurs across Afghan history with grim regularity.

A cosmopolitan beginning

Zabuli was born on 14 August 1896 in Ghazni province, in the heart of Afghanistan. The country of his birth was a landlocked, largely agrarian kingdom, poor in formal institutions and caught geopolitically between the British and Russian empires — the "Great Game" terrain of the late nineteenth century. What set Zabuli apart from the start was education, and an unusually wide one. He was educated in Tashkent, in Russian Central Asia, and in Berlin, in the heart of industrial Europe. For an Afghan of his generation this was a remarkable formation: it gave him direct exposure to two of the modernising societies of the age, to their commerce, their finance, and their ideas about how a modern economy was organised.

That cosmopolitan education is the key to understanding everything he later built. Afghanistan in the early twentieth century had almost none of the apparatus of a modern financial economy — no central bank, no commercial banking system, little in the way of formal credit or currency management. A man who had seen how Russian and German commerce and banking functioned, and who combined that knowledge with Afghan roots and commercial ambition, was positioned to import institutions that simply did not exist at home. Zabuli was, in this sense, a transplanter of modernity: someone who took what he had learned abroad and tried to graft it onto the economy of his homeland.

The cotton trade and the road to capital

Before he was a banker, Zabuli was a trader, and the route to his banking career ran through commerce — specifically, the cotton trade with Russia. This is an important and often-overlooked part of the story, because it explains where the capital and the commercial credibility came from. Trade with Russia in commodities such as cotton was one of the few avenues through which an Afghan entrepreneur of the period could build real wealth and, just as importantly, real commercial relationships across the border. Zabuli used that trade to accumulate capital and to establish himself as a serious commercial figure rather than a court favourite or a landed aristocrat.

The progression from trader to financier is a classic one in economic history — merchants accumulate capital and commercial knowledge, and then move to organise credit and finance for others. Zabuli followed exactly that path, but in a context where the financial institutions he needed did not yet exist, which meant he would have to build them himself. The cotton trade gave him the means and the standing; what he did with them was to attempt something far more ambitious than any single trading venture — the construction of a banking system.

The cross-border nature of that trade is itself worth noting, because it placed Zabuli at the intersection of two worlds and gave him a vantage point few of his countrymen shared. Commerce with Russia meant dealing in foreign currency, managing exchange and credit across a frontier, and confronting in practice the very monetary problems that a banking system is built to solve. A trader who has spent years moving cotton across the Russian border and settling accounts in the process has, in effect, served an apprenticeship in the mechanics of finance — the conversion of goods into capital, the management of credit and risk, the handling of currencies. By the time Zabuli turned to founding a bank, he was not a theorist applying textbook lessons from Berlin but a practitioner who had lived the problems at the merchant's level. That blend of European education and hard commercial experience is what made him uniquely equipped to build, rather than merely imagine, the institutions Afghanistan lacked.

Ashami, and the birth of Bank-e-Milli Afghan

In 1931 to 1932, Zabuli founded the Ashami company, a joint-stock commercial enterprise that pooled private Afghan capital. Out of Ashami grew the institution for which he is principally remembered: Bank-e-Milli Afghan — the Afghan National Bank — the first bank in the country's history. It is difficult to overstate what this meant. A nation that had functioned without any formal banking now had one, created not by the government but by a private entrepreneur marshalling private capital.

And here lies the central, structurally fascinating feature of Zabuli's achievement, the one that the honest critical lens fixes on. Bank-e-Milli Afghan was privately owned, yet it was given de-facto currency-regulation powers — that is, a private institution was handed responsibilities that in most economies belong to a public central bank. This is the entanglement of private banking with state-building, and it is worth dwelling on rather than passing over. On one hand, it was a pragmatic solution to a real problem: a poor state with little institutional capacity needed the functions of a central bank, and the only entity capable of providing them was the private bank a capable entrepreneur had just built. Delegating currency regulation to Zabuli's bank was, in context, a reasonable way to get a modern monetary function stood up quickly. On the other hand, it fused private interest and public authority in exactly the way that should make a careful observer uneasy. A private institution that regulates the currency holds a quasi-sovereign power; its owners' commercial interests and the nation's monetary interests are placed under the same roof, with no clean wall between them. That fusion was not, in Zabuli's case, the prelude to any documented abuse — there is no scandal here — but it is a textbook illustration of how, in young states with weak institutions, the line between building a private business and building a public one blurs to the point of disappearing.

The arrangement was, in its way, the foundational version of a pattern this series sees again and again in different countries: the entanglement of a major private enterprise with the functions and authority of the state. Zabuli's case is the cleanest specimen precisely because it was not corrupt — it was simply structural, a matter of how a modern economy gets built where none of its institutions previously existed.

Minister of National Economy, and the trip to Washington

Zabuli's standing as the architect of Afghan finance carried him into government. In 1948 he served as Minister of National Economy, a role that placed the country's leading financier formally inside the state's economic management. In that capacity he undertook one of the more poignant episodes of his career: he travelled to Washington seeking American aid and arms for Afghanistan — and was denied.

The episode is worth recording because of what it reveals about the limits of what even a capable builder could achieve in Afghanistan's geopolitical position. The country sat between great powers and struggled to attract the support that might have accelerated its modernisation. Zabuli, the man who had built its banking system from private capital and European know-how, went to the world's emerging superpower to seek the resources for a larger national development, and came home empty-handed. It is a small but telling illustration of the structural constraint that shadows the whole story: an individual entrepreneur, however gifted, could build an institution, but he could not, on his own, secure the external support or the political stability that institution-building at a national scale ultimately required. The denial in Washington prefigures, in miniature, the later fate of his bank — the sense of a builder running up against forces far larger than any business could control.

Directing the bank from Nahant

In his later years Zabuli directed the bank's operations from an unlikely vantage point: Nahant, Massachusetts, a small coastal town near Boston, far from Kabul. That a man could run, or at least guide, Afghanistan's principal financial institution from New England is itself a striking image, and it carries a melancholy resonance with the broader Afghan story of displacement and diaspora that would later become so familiar.

The detail matters for more than its poignancy. It signals the degree to which Zabuli, like so many Afghans of means and modern outlook across the twentieth century, ended up operating at a distance from a homeland whose politics had grown inhospitable or unstable. The founder of the country's first bank spending his later life in a Massachusetts town, steering his creation from afar, is an early instance of a pattern that the decades of war after 1979 would turn into a mass phenomenon: the Afghan builder, modern and capable, separated by upheaval from the country he had tried to build. In Zabuli's case the separation was not the violent exile of the war years but a quieter distancing — yet it points unmistakably toward the precariousness that defines Afghan institution-building, where the creator and his creation could end up on opposite sides of the world.

Nationalisation: the institution captured

The decisive turn in the institutional story came in 1975, when Bank-e-Milli Afghan was nationalised by President Mohammed Daoud Khan, who had seized power in a 1973 coup that ended the monarchy. The bank that Zabuli had founded as a private enterprise — built with private capital, run for decades as a private institution even as it exercised public-style powers — was taken into state ownership.

This is the structural climax of the whole story, and it is where the honest critical frame pays off. Zabuli's bank had, from the beginning, blurred the line between private and public by holding currency-regulation powers. Nationalisation simply completed the logic: an institution that had always exercised quasi-sovereign authority was finally absorbed wholesale into the sovereign. The private creation became a state asset. And the timing — in the turbulence following a coup, two years after the monarchy fell and three years before the communist revolution that would precede the Soviet invasion — underscores the fragility of the whole enterprise. Zabuli had built something durable enough to outlast him, but not durable enough to remain his, or to remain independent of whichever regime happened to hold power. The institution survived; its founder's ownership and the principle of its independence did not.

The frame that does Zabuli justice is therefore neither pure celebration nor any imputation of wrongdoing, but a clear-eyed account of capture. He was a builder whose institution outlived him but was taken by the state — a recurring Afghan pattern in which private creation is repeatedly absorbed, appropriated, or destroyed by the political upheavals that define the country's modern history. The bank he founded in 1931 still bears its name; but the man who built it watched, from a town an ocean away, as the state he had served made it its own.

Building modernity where none existed

It is worth dwelling on the sheer difficulty of what Zabuli attempted, because it is easy, from the vantage of a world saturated with banks and central banks and financial regulation, to underestimate the scale of building such things from nothing. Afghanistan in the 1920s and 1930s was not a place where a modern financial institution could simply be slotted into an existing framework. There was no body of commercial law built around banking, no established culture of formal deposit and credit among a largely rural and agrarian population, no pool of trained financial professionals, and no precedent that ordinary people or merchants could look to in deciding whether to trust their money to a bank at all. Trust, in particular, is the foundation on which all banking rests, and in a society with no experience of formal banking it had to be manufactured rather than assumed.

What Zabuli was really doing, then, was not just founding a company but importing and domesticating an entire institutional form. He had to persuade Afghan capital holders to pool their money in a joint-stock enterprise — the Ashami company — when the joint-stock form itself was a novelty. He had to build the operational machinery of a bank, train people to run it, and establish the practices of lending, deposit, and currency management in a context where none of these had institutional roots. And he had to do all of this in a kingdom whose government, while supportive enough to grant his bank extraordinary powers, lacked the administrative depth to provide the legal and regulatory scaffolding that banking in more developed economies took for granted. This is why his cosmopolitan education was not incidental but essential: he had seen, in Tashkent and Berlin, how these institutions actually functioned, and he was attempting to transplant that knowledge into soil that had never grown it. The achievement is best understood not as the creation of one bank but as the creation of the very category of banking within a national economy — an act of institutional invention that is far rarer and far harder than building a single successful firm.

The recurring Afghan pattern

Zabuli's story is most illuminating when set within the longer arc of Afghan business history, because it is the earliest clean instance of a pattern that repeats, with darker variations, across the decades that followed. The pattern is this: private enterprise and the institutions it builds are repeatedly absorbed, appropriated, or destroyed by the political convulsions that define the country's modern history, so that the builder rarely gets to keep, or pass on intact, what he has made. Zabuli built a bank and was granted public powers over it; a post-coup state nationalised it. The logic that began with his benign, structural entanglement of private banking and public authority would, in later eras and under different and far less scrupulous hands, curdle into the outright kleptocracy that the Kabul Bank fraud of the post-2001 period came to symbolise — a roughly 900-million-dollar looting of the country's largest private bank, with convictions handed down in 2013.

The contrast between the two cases is instructive precisely because it isolates the variable. Zabuli's bank and the later Kabul Bank both involved the fusion of private financial institutions with public power and public money; both illustrate how, in a weak-institution environment, that fusion is the central structural risk of Afghan banking. But Zabuli's case was not corrupt — it was a pragmatic, if hazardous, arrangement born of necessity — whereas the later catastrophe was theft on a national scale. What changed was not the structure but the integrity of the people operating within it, and the strength of the institutions meant to constrain them. Zabuli thus stands at the clean origin of a pattern that history would later corrupt: he shows what the entanglement of private banking and state authority looks like when it is merely structurally fraught rather than criminally abused, and his bank's nationalisation shows how even the honest version of that entanglement ends, in a country governed by force, with the state taking what the builder made. The recurring Afghan pattern is not, at root, about any individual's wrongdoing. It is about the impossibility of keeping a private institution genuinely private — and genuinely independent — in a polity where power changes hands by coup and revolution rather than by law.

A very long life, an ambiguous legacy

Abdul Majid Zabuli died on 23 November 1998, at the age of 102 — a lifespan that, by itself, spans almost the entire arc of modern Afghan history, from the late-nineteenth-century kingdom of his birth through the monarchy, the coups, the communist revolution, the Soviet invasion, and into the civil war and Taliban era of the 1990s. He outlived the world that had made his achievement possible, and he outlived the independence of the institution he had created.

The legacy is genuinely ambiguous, and that ambiguity is the truest thing one can say about it. On one hand, his accomplishment was foundational and lasting in the most literal sense: he gave Afghanistan its first bank and the rudiments of a modern financial system where none had existed, an act of institutional creation that few private individuals anywhere can claim. On the other hand, the deeper lesson of his life is cautionary, and it is about fragility rather than failure. He built a private institution and was granted public powers over it; he served as a minister and was rebuffed by Washington; he guided his bank from exile in Massachusetts; and he saw it nationalised by a post-coup government. Each step traces the same underlying truth — that in a country repeatedly remade by force, the builder does not get to keep what he builds, and the institution, however well-founded, ultimately answers to whoever holds power rather than to whoever created it.

The honest verdict

Abdul Majid Zabuli is, in this series, the purest example of the builder rather than the accumulator, and the verdict on him is correspondingly free of the moral ambiguity that attaches to figures caught in scandal. There is no fraud here, no documented abuse, no fortune extracted at the public's expense. There is, instead, a genuine and historic act of creation: a privately financed bank, built on capital from the Russian cotton trade and knowledge gathered in Tashkent and Berlin, that became the foundation of an entire national financial system. By that measure he is one of the most consequential business figures Afghanistan ever produced.

But the honest reading is structural, and it is sobering. Zabuli's bank was handed currency-regulation powers it should arguably never have held as a private entity, fusing private interest and public authority in a way that young states with weak institutions repeatedly fall into. And his life traces, with almost diagrammatic clarity, the central peril of Afghan institution-building: the creation outlived its creator only to be captured by the state, nationalised in the turbulence of a coup-ridden era, while the founder himself ended his very long life in effective exile an ocean away. He proved that a single capable entrepreneur could build a modern institution from nothing; he also proved, against his own intentions, how little such an institution's independence is worth in a country where power changes hands by force. That is the recurring Afghan pattern, and Zabuli — builder, minister, exile — embodies it more completely than anyone.

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Editor's note: HustleMemo writes founder-led case studies grounded in public reporting. No financial or legal wrongdoing is documented against Abdul Majid Zabuli; his era predates the modern Afghan banking scandals. The critical lens applied here is structural — the entanglement of a private bank with currency-regulation powers, and the capture of a private institution by the state — not an imputation of misconduct. Corrections: editorial@hustlememo.com.

Sources

• "Abdul Majid Zabuli," Wikipedia (born 14 August 1896, Ghazni province; educated in Tashkent and Berlin; built capital through the cotton trade with Russia; founded the Ashami company in 1931–32, which became Bank-e-Milli Afghan, the country's first bank; died 23 November 1998, aged 102).
• The founding of Bank-e-Milli Afghan as a privately owned bank given de-facto currency-regulation powers — the father of Afghanistan's modern banking system.
• Zabuli's service as Minister of National Economy in 1948 and his trip to Washington seeking US aid and arms, which was denied.
• His direction of the bank's operations from Nahant, Massachusetts, in his later years; the bank's nationalisation in 1975 by President Daoud.
• General context on Afghanistan's twentieth-century history of coups and regime change, within which private institution-building proved precarious.