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Establishment and Operation of Foreign Currency Saving Account for Residents of Ethiopia, Non-Resident Ethiopian and Non-Resident Ethiopian Origin (Directive No. 783/2021)

National Bank Of Ethiopia783 /2021

Summary

This directive establishes and outlines the procedures for opening and operating foreign currency saving accounts for residents of Ethiopia, non-resident Ethiopians, and individuals of non-resident Ethiopian origin. It aims to incentivize foreign exchange inflow and support the country's foreign exchange reserves.

Who's affected

Individuals who are residents of Ethiopia, Ethiopian nationals living abroad, and foreign nationals of Ethiopian origin seeking to save foreign currency.

Action required

Eligible individuals should review the directive to understand the requirements and procedures for opening and operating a foreign currency saving account.

Key points

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  • Establishes foreign currency saving accounts for residents, non-resident Ethiopians, and those of Ethiopian origin.
  • Aims to boost foreign exchange inflow and reserves.
  • Requires a minimum initial deposit of USD 50.
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    • Allows withdrawals for specific expenses abroad and limited debit card usage.
    • Specifies permissible currencies (USD, GBP, EUR) and convertible currencies.
    • Banks are exempt from the 30% surrender requirement for these accounts.
    • Penalties apply to banks and account holders for violations.

Requirements

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  • Minimum initial deposit of USD 50 or equivalent in other specified currencies.
  • Production of required documents for account opening.
  • Application letter and specimen signature.
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    • Authenticated documents for account opening (for non-residents).
    • Deposit of eligible foreign currencies or convertible currencies.
    • Account balances can be sold to the opening bank.
    • Withdrawals for education, medical, and travel expenses abroad require valid supporting documents.
    • 10% of the foreign currency balance can be withdrawn via debit card.
    • Account can be used as collateral for local currency credit.
    • Account can be used to purchase shares from financial institutions.
    • Withdrawals other than for specified purposes must be in Birr.
    • Prohibition on depositing foreign currency cash notes from forex bureaux not utilized due to travel cancellation.
    • Prohibition on depositing foreign currency from illegal sources.
    • Prohibition on overdrawing the account.

Rights and permissions

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  • Right to open a foreign currency saving account (for eligible individuals).
  • Right to choose between interest-bearing or interest-free accounts.
  • Right to sell account balances to the opening bank.
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    • Right to use funds for self, spouse, and children's education, medical, and travel expenses abroad.
    • Right to withdraw 10% of the foreign currency balance in debit card.
    • Right to use the account as cash collateral for local currency credit.
    • Right to use funds to purchase shares from financial institutions.

Restrictions

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  • Foreign currency cash notes from forex bureaux not utilized due to travel cancellation cannot be used for credit or opening an account.
  • Foreign currency cash notes from illegal sources cannot be used for credit or opening an account.
  • Withdrawal in foreign currency is generally prohibited except for specific purposes outlined in Article 8(b).
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    • Overdrawing the account is prohibited.

Penalties

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  • Any bank violating the directive is subject to a penalty of Birr 10,000 for each violation.
  • Account holders violating the directive may have their account suspended, and the case reported to the NBE.
  • Failure to comply with the directive's provisions by any person is punishable under Article 26(1) of the National Bank of Ethiopia Establishment Proclamation No. 591/2008.

Objectives

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  • To create incentives for foreign exchange inflow into the formal channel.
  • To encourage saving and investment by eligible individuals.
  • To support the international foreign exchange reserve and ease the country's balance of payments problem.

Organizations

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  • National Bank of Ethiopia
  • Banks licensed by the National Bank of Ethiopia

Legal references

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  • National Bank of Ethiopia Establishment Proclamation No. 591/2008 (Article 20(2), 20(3) and 27(2))
  • Proclamation Number 270/2002
  • Licensing and Supervision of Banking Business Directives No. SBB/35/2004
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    • Directive No. FXD/54/2018
Original sourcehttps://justice.gov.et/en/directives/establishment-and-operation-of-foreign-currency-saving-account-for-residents-of-ethiopia-non-resident-ethiopian-and-non-resident-ethiopian-origin-directive-no-783-2021/
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