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Licensing and Supervision of Banking Business Contribution in Kind (Directive No. 197/2021)

National Bank Of Ethiopia197/2021

Summary

This directive outlines the conditions and valuation methods for accepting contributions in kind as capital for banking businesses in Ethiopia.

Who's affected

Banks and financial institutions seeking to use non-cash assets as part of their capital.

Action required

Banks must ensure that any contributions in kind are valued by professional valuers acceptable to the National Bank of Ethiopia and comply with the specified limits relative to paid-up capital.

Key points

3
  • Certain tangible assets can be considered capital contributions.
  • Professional valuation is mandatory for contributions in kind.
  • Strict limits apply to the percentage of capital that can be in-kind.

Requirements

3
  • Contributions in kind must be acceptable to the National Bank of Ethiopia.
  • Contributions in kind must be valued by professional valuers acceptable to the National Bank of Ethiopia.
  • Capital contributions in kind shall not exceed 25% of paid-up capital in excess of minimum required capital.

Rights and permissions

2
  • Banks have the right to consider certain assets (built-in vault, buildings, essential vehicles) as capital contributions if acceptable to the Bank.
  • Contributions in kind, when valued correctly, may be considered as capital.

Restrictions

2
  • Contributions in kind cannot be used to fulfill the minimum required capital.
  • Contributions in kind cannot exceed 25% of paid-up capital in excess of minimum required capital.

Objectives

3
  • To define acceptable forms of contribution in kind for banking business capital.
  • To establish valuation standards for contributions in kind.
  • To set limits on the proportion of paid-up capital that can be represented by contributions in kind.

Organizations

1
  • National Bank of Ethiopia

Legal references

2
  • Monetary and Banking Proclamation No.83/1994
  • Licensing and Supervision of Banking Business Proclamation No.84/1994
Original sourcehttps://justice.gov.et/en/directives/licensing-and-supervision-of-banking-business-contribution-in-kind-directive-no-197-2021/
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