The National Bank of Ethiopia (NBE) has issued the long-awaited directive requiring commercial banks to raise their minimum paid-up capital to 5 billion Birr.
This is a ten-fold increase from the previous 500 million birr paid-up capital requirement to establish a commercial bank in Ethiopia.
The directive has given a five year grace period for existing banks to raise their paid capital to 5 billion Birr.
Those banks which are under establishment are advised to merge and meet the required initial paid up capital.
The increase in a paid capital was meant to tackle growing risks of the time but experts claim huge capital cannot be a guarantee to avoid failure or default.