The central bank’s imposition of limits on cash withdrawals by savers and businesses targets payment instruments other than cash, thereby mitigating liquidity crunches and reducing note printing costs, as well as fighting fraud, its officials said today.
The National Bank of Ethiopia’s (NBE) directive released today limits daily and monthly cash withdrawals of businesses to 300,000 Br and 2.5 million Br, respectively. Individual savers are allowed to withdraw a maximum of 200,000 Br a day and one million Birr a month.
However, the directive gave discretion to presidents of financial institutions to approve cash withdrawals in excess with an exception after reviewing evidence submitted by depositors supporting their demand. The financial institutions are required to submit a weekly report showing details of excess cash withdrawals to the central bank no later than Tuesday of the following week.
Signed by Yinager Dessie (PhD), governor of the central bank, the directive becomes effective today, May 19, 2020. The new rule does not apply to cash withdrawals made within and between financial institutions and account holding branches.
Yesterday, the Governor had a discussion with presidents of commercial banks about the new directive that limits cash withdrawals. This was followed by a proposal tabled to the central bank a few months ago, where the Ethiopian Bankers Association recommended a cash withdrawal limit as a solution for the existing liquidity crisis in the banking industry.
Source of original article: Addisfortune (addisfortune.news).
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