Legal and Jurisprudential Analysis of Bills of Exchange in Afghanistan’s Payment and Banking System: A Comparative Study with International Regulations

Abstract

Bill of exchange, as one of the oldest and most reliable commercial instruments, plays a significant role in facilitating domestic and international transactions and enables payment without direct cash transfer. This written document, signed by the issuer, orders the payment of a specified amount unconditionally on a fixed date or on demand to the holder and has both legal and economic nature. This research examines the legal and Islamic jurisprudential (Shariah) framework governing the use of bills of exchange within Afghanistan’s payment and banking system. Bills of exchange, as key financial instruments in commercial transactions, play a vital role in facilitating trade and credit. However, their application in Afghanistan remains limited due to legal ambiguities, enforcement challenges, and religious considerations. The importance of studying the bill of exchange within Afghanistan’s banking system lies in its potential use as a tool for short-term financing, payment guarantee, reduction of cash requirements, and banking risk management. The aim of this study is to provide a legal and jurisprudential analysis of the bill of exchange under Afghan laws and to compare it with international standards, such as the Geneva Convention and the Uniform Customs and Practice for Documentary Credits (UCP). The research method employed is library research and a comparative analysis of legal documents and international regulations. The findings indicate that despite the clear legal status of the bill of exchange, its practical application remains limited, with the main factors being weak banking and judicial infrastructure, lack of trust among traders, absence of standardized digital templates, and predominance of traditional money transfer systems such as remittances. Strengthening legal and banking infrastructure, increasing commercial trust, and establishing digital mechanisms are required.