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Establishment and Operation of Foreign Currency Saving Account for Residents of Ethiopia, Non-Resident Ethiopians, and Non-Resident Ethiopian Origin Directive No. 615/2021

National Bank Of Ethiopia615/2021

Summary

This directive establishes and outlines the operational procedures for Foreign Currency Saving Accounts for Residents of Ethiopia, Non-Resident Ethiopians, and Non-Resident Ethiopians of Origin, aiming to incentivize foreign exchange inflow and support the country's foreign exchange reserves.

Who's affected

Individuals residing in Ethiopia, Ethiopians living abroad, and foreign nationals of Ethiopian origin.

Action required

Eligible individuals should review the directive to understand the criteria and procedures for opening and operating a foreign currency saving account and proceed to open an account if desired.

Key points

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  • Establishes foreign currency saving accounts for residents, non-resident Ethiopians, and non-resident Ethiopians of origin.
  • Aims to encourage foreign exchange inflow and support national reserves.
  • Specifies eligibility criteria, account opening procedures, and types of permitted currencies.
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    • Outlines permitted uses of account funds, including education, medical, and travel expenses abroad.
    • Details restrictions on deposits and withdrawals.
    • Assigns obligations and potential penalties to banks and account holders for non-compliance.

Requirements

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  • Minimum initial deposit of USD 50 or equivalent in other specified currencies.
  • Production of required documents for account opening.
  • For Non-Resident Ethiopians and Non-Resident Ethiopians of Origin, opening can be done in person or by post, with authenticated documents required afterward.
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    • Request for opening an account must be accompanied by a letter of application and a specimen signature.
    • Power of attorney holders can open accounts but cannot credit them on behalf of non-residents or foreign nationals of Ethiopian origin.
    • Banks must maintain confidentiality of account information.
    • Banks must report account numbers and balances monthly to specific directorates of the National Bank of Ethiopia.
    • Foreign currency credited in these accounts will not count towards the 30% surrender requirement under Directive No. FXD/54/2018.

Rights and permissions

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  • Eligible individuals have the right to open a foreign currency saving account.
  • Account holders are free to sell all or part of their account balances to deposit opening banks.
  • Account holders can use funds for self, spouse, and children's education, medical, and travel expenses abroad upon presentation of valid documents.
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    • Account holders have the right to withdraw 10% of the foreign currency balance in a debit card.
    • Account holders can use their account balance as cash collateral to obtain local currency credit from banks.
    • Account holders can use funds to purchase shares from Financial Institutions.

Restrictions

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  • Foreign currency cash notes originally bought from forex bureaux but not utilized due to cancellation of travel cannot be used to credit or open an account.
  • Foreign currency cash notes from any illegal sources cannot be used to credit or open an account.
  • Withdrawals are permitted only in birr, except for specified purposes under Article 8(b).
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    • Overdrawing of 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.
  • If an account holder violates the directive, the opening bank may suspend the account and report the case to the National Bank of Ethiopia (NBE).
  • Any person failing to comply with the directive will be punished in accordance with Article 26(1) of the National Bank of Ethiopia Establishment Proclamation No. 591/2008.

Objectives

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  • To create incentives for eligible individuals to maintain foreign currency accounts with banks in Ethiopia.
  • To encourage the inflow of foreign exchange into the formal channel.
  • To support the international foreign exchange reserve of the country.
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    • To ease the balance of payments problem of Ethiopia.
    • To encourage saving and investment by eligible individuals.

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-ethiopians-and-non-resident-ethiopian-origin-directive-no-615-2021/
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