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Ethiopia - Apply for a Banking Business license

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Contents

Introduction

Banking is a rapidly growing industry in Ethiopia. Currently there are 3 state owned and 16 private commercial banks; Commercial Bank of Ethiopia is the largest, controlling the majority assets of the industry.

Despite strict government regulations through lending quota, bond buying, windfall tax and increased capital requirements, banks are reporting strong profit and paying high dividends.

The proper licensing and supervision of banks and the banking system in Ethiopian are under the National bank of Ethiopia of the Banking business Proclamation No.592/2008. The National Bank of Ethiopia was established in 1963 by proclamation 206 of 1963 and began operation in January 1964.

Following the proclamation the National Bank of Ethiopia was entrusted with the following responsibilities.
  • » To regulate the supply, availability and cost of money and credit.
  • » To manage and administer the country's international reserves.
  • » To license and supervise banks and hold commercial banks reserves and lend money to them.
  • » To supervise loans of commercial banks and regulate interest rates.
  • » To issue paper money and coins.
  • » To act as an agent of the Government.
  • » To fix and control the foreign exchange rates.

Eligibility

  • Commercial Banks may be established by any eligible corporate body or corporation duly licensed by the National bank of Ethiopia to accept Deposit,lend money,issue money to clients, buy foreign currency and draft and sell foreign currency.
  • Commercial banks applicant must be an Ethiopian Nationality or foreign resident but residing in Ethiopia.
  • All Individual or company registered for banking Business in Ethiopia with the registrar of Companies.

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Instructions

  • The National Bank has broad powers in the affairs of banks. It can suspend or remove a CEO, director or other senior executives,
  • It also can suspend voting right of an influential shareholder when he fails to fulfill the ethical requirements of the National Bank.
  • No person shall carry out a Banking business unless he/she is in possession of a Banking Business License.
  • A person who fails to contravenes or fail to comply with section 1 shall be guilt of any offence and shall be dealt with in accordance with Financial laws.

Required Information

  • Full Name of Applicant
  • Address of Applicant
  • Location of Foreign Exchange Bureau
  • License Number
  • A tax clearance certificate.
  • Evidence of provisional tax payment
  • Full names, addresses and designations of the employees of the bureau.
  • Proof of legal identification. Your national driver's license or international passport are the best for this.
  • Proof of legal address. House rent receipts, and utility bills stating your house address are acceptable.
  • Bank statement. Not all Authorities require this except for further verification purpose or alternatives.
  • Utility Bill Receipt. Some Authorities require this to further verify your legal identity and proof of social responsibility.

Procedure

Obtaining a Bank Business license include the following steps
Step I -

Book an appropriate name with the Registrar of Companies and write to the National Bank to seek approval for the name. The name should incorporate the words “Commercial Bank”, ie "XYZ BANK". or "XYZ COMMERCIAL BANK".

Step II -

Register with the Ministry of Trade or Regional Trade bureau in Ethiopia.

Step III -

Attend a First meeting with the organizers and keep with you a Signed minutes of the first meeting along with attendance sheet.

Step IV -

Submit a prospectus which is a printed statement that describes and forecast the course or nature of the company along with expected risks distributed to the prospective investors.

Step V -

Write an application requesting to open a blocked subscription account indicating the name of the Bank(s)Branch(es)

Step VI -

A Duly completed application form as specified under the Bank proclamation of the Directives for organizing a Bank and project manager. Attach a Questionnaire test for organizing a bank and project Manager.

Step VII -

Attach Evidences of payment of investigation.

Step VIII -

A duly completed application form together with all enclosures as stated in the baking supervision Directives.

Step IX -

Attach the evidence of paid up capital which includes certificate of deposits in a blocked account and evidence of valuation of contribution in Kind if any.

Step X -

Attach a list of names nationality,address,number and value of subscribers shares of founder to be published in a local Newspaper in Ethiopia.

Step XI -

After the name has been approved by the National Bank, register the company and after making a formal application to the Director, Bank Supervision Department, National Bank of Ethiopia in a duly completed FORM/CBK/FXD1 attaching the following documents:

  • non-refundable application fee of 20,000 Birr (bankers cheque payable to the National Bank of Ethiopia);
  • a certified copy of a statement of affairs of the applicant;
  • a certified copy of the applicant’s memorandum and articles of association;
  • a certified copy of the applicant’s certificate of incorporation;
  • a feasibility study including financial projections for three years (balance sheet, profit and loss account and cash flow statements), organizational structure, physical location and postal address;
  • bank statements of the bureau’s shareholders and directors for a period of six months prior to the date of application;
  • duly completed fit and proper forms for the shareholders, directors and principal officers of the bank;
  • credit reports from a credit reference bureau for the shareholders, directors and the principal officers of the Bank;
  • a declaration by the applicant that none of its directors and/or shareholders has ever been declared bankrupt, participated in the management of a collapsed institution, convicted by any court of competent jurisdiction in Ethiopia or elsewhere of a criminal offence involving fraud, money laundering, tax evasion, or any other act of dishonesty;
  • a declaration by the applicant that none of its directors and/or shareholders holds a similar position or role in any other Commercial Banks;
  • an undertaking by the applicant to comply with the provisions of the National Bank of Ethiopia Act, the Regulations, the Commercial Banks Guidelines and any instructions/ directions issued by the National Bank of Ethiopia regarding the establishment and operations of Commercial bank at all times; and
  • A Business plan stating, financial analysis,banking sectoral analysis, business Environment,organization charts,stratategic and operation plan,source of capital, accounting policies,technology competency, products and services.
  • any other information as may be required by the National Bank of Ethiopia.
Step XII -
  • pay the licence fee of .60,000 Birr to the National Bank of Ethiopia by banker’s cheque;
  • transfer the non-interest bearing deposit of US$30,000 to the National Bank of Ethiopia offshore account;
  • invite the National Bank of Ethiopia to inspect the Bank’s premises prior to commencement of business.
Step XIII -

Upon fulfillment of the above requirements or otherwise the National Bank shall:

  • issue a Banking licence to the applicant; or
  • inform the applicant in writing that the application has been declined and advise the unsuccessful applicant that an appeal to the national Bank for review of the decision to decline may be lodged within 30 days from the date thereof.
Step XIV -

On receiving the license from the National bank of Ethiopia, the applicant must obtain the certificate of commencement of Business from the registrar of companies,and submit a copy to the National bank of Ethiopia.

  • Notify the Bank of Ethiopia of its Shareholders,directors and Staff of the Commercial bank including the following details:
  • Names
  • Residential Address
  • Specimen signature
  • Recent passport size photos endorsed by the Bank Directors.

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Required Documents

  • Completed application and other accompanying documents;
  • Investigation fee paid during submission application;
  • Publish a notice of intention to engage in banking business in widely circulating newspapers;
  • A minimum of one-fourth of the subscribed shares shall be fully paid in cash;
  • Minimum paid-up capital paid in cash and deposited in a blocked account in a bank in the name of the prospective bank; (recently the National Bank has raised the minimum paid up capital to half a billion birr from 75 million birr.)
  • Directors, the chief executive officer and senior executive officers of the bank shall meet the qualification criteria prescribed by the National Bank;
  • The premises, security arrangements and cash vault meeting National Bank standard.
  • A duly completed application form.
  • Proper book keeping Register
  • Academic Qualification documents
  • designation and specimen signature of the staff members
  • Address of applicant
  • evidence of provisional tax payment
  • A tax clearance certificate.

Fees

  • A non-refundable application fee of 20,000 Birr (bankers cheque payable to the National Bank of Ethiopia)
  • A licence fee of 60,000 Birr payable to the National Bank of Ethiopia by banker’s cheque;

Validity

Valid for 5 years

Documents to Use

Please attach documents that can be used by people. e.g. links

Sample Documents

Please attach sample completed documents that would help other people.

Processing Time

Processing take 90 days

Office Locations & Contacts

National Bank of Ethiopia

Sudan Avenue Street

P.O.Box:5550/2048

Tel:+251-11 551 7430

Fax:+251-11 551 4588

E-Mail: nbe.edpc@ethionet.et

Telegraphic Address NATIONAL BANK

Website:http://www.nbe.gov.et

You can Visit the following link for Various Offices in National Bank Of Ethiopia,http://www.nbe.gov.et/contactus/index.html

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Video

Videos explaining the procedure or to fill the applications. 
Attach videos using the following tag <&video type="website">video ID|width|height<&/video&> from external websites.
Please remove the "&" inside the tags during implementation.
Website = allocine, blip, dailymotion, facebook, gametrailers, googlevideo, html5, metacafe, myspace, revver, 
sevenload, viddler, vimeo, youku, youtube
width = 560, height = 340, Video ID = Can be obtained from the URL of webpage where the video is displayed.
e.g In the following url "http://www.youtube.com/watch?v=Y0US7oR_t3M" Video ID is "Y0US7oR_t3M". 
	

Information which might help

The banking business proclamation No. 592/2008 provides for criminal prosecution and penalty for acts which are in contravention to the law.

For instance,

Transacting in a banking business without license, introducing new banking services, merger or takeover, entering into any arrangement or agreement for the sale or disposal, by amalgamation or otherwise, of its business, or effect major changes in its line of business, transfer or otherwise dispose of the whole or any part of its property, whether in or out of Ethiopia without prior approval by the NBE will be punishable with rigorous imprisonment from 10 to 15 years and with a fine of Birr20,000.

Other uses of the Document/Certificate

Please explain what are other uses of obtaining this document/certificate.
e.g. Birth Certificate can be used as proof of identity.

External Links

http://www.nbe.gov.et/pdf/directives/bankingbusiness/sbb-56-2013.pdf

http://www.2merkato.com/articles/industry/869-banking-in-ethiopia-regulations-and-procedures

Others

More information which might help people.
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