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NBE directive requires Banks, MFIs report weekly

Banks and microfinance Institutions are required to report to the National Bank of Ethiopia (NBE), on a weekly basis, to ensure strict compliance to the recently effected directive limiting cash withdrawal from banks in the country, The Reporter learnt.

The directive caps cash withdrawals from financial institutions both by individuals and businesses, while obliging commercial banks and microfinance institutions in the country to make a weekly report to ensure compliance.

It limits cash withdrawal for individuals at 200,000 birr a day and one million birr a month, while judicial persons can withdraw a maximum of 300,000 birr a day and 2.5 million birr a month. With the exception of extraordinary cases, where the directive allows for some flexibility, no one can withdraw money exceeding the sum total limited by the directive.

While a financial institution may exceptionally approve withdrawal of money in excess of the limit based on proper reason and evidence using NBE criteria, such decision/ approval shall be made only by the Chief Executive Officer of the financial institution, the directive states.

Accordingly, the directive issued on Tuesday May 22, 2019 provides that, “For the purpose of determining strict compliance to the cash withdrawal limits, a financial institution shall submit to Banking Supervision, Microfinance Institutions Supervision or Payment and Settlement System (for payment system related issues) Directorates of the National Bank, as the case may be, a weekly report showing the details of cash withdrawals approved by a financial institution in excess of the limits, no later than Tuesday of the following week.”

While it is mandatory for all financial institutions to comply with the directive, it is provided that, in case of a force majeure such as a system-wide blackout and other acceptable compelling reasons, the central bank may suspend the implementation until such time that it is resolved.

If a financial institution violates the directive and makes withdrawals exceeding the limits, it will be punished by a fine of 25 percent of the withdrawn amount.

But, the limits of withdrawal do not apply for withdrawals made within a financial institution, between financial institutions and issue account holding branch. An ‘‘Issue Account Holding Branch’’ is “a bank branch designated by the National Bank to engage in the distribution and collection of currency to and from bank branches, respectively, on its behalf.”

In addition to this, the directive obliges financial institutions to “put in place policies and procedures that address issues including deployment of diversified non-cash based payment services, encouraging the public to use non-cash based payment though adoption of various strategies and incentives, unde1iaking of awareness of digital financial services and ensuring of compliance with this Directive, among others.