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Opening, Relocation and Closure of Branch Offices of Capital Goods Finance Companies (Directive No. 953/2022)

National Bank Of Ethiopia953/2022

Summary

This directive outlines the procedures and requirements for opening, relocating, and closing branch offices of Capital Goods Finance Companies, ensuring sound practices and the protection of customer interests.

Who's affected

Capital goods finance companies operating in Ethiopia.

Action required

Capital goods finance companies must submit an application to the National Bank of Ethiopia within six months from the effective date to license all existing branches.

Key points

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  • Companies must adhere to specific procedures for opening, relocating, and closing branches.
  • Prior approval and licensing from the National Bank of Ethiopia are required for all branch activities.
  • Customer interests must be protected during branch closures.
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    • A transitional provision requires existing branches to be licensed within six months.

Requirements

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  • Conduct a feasibility study before opening a new branch.
  • Provide adequate training to staff on company policies, National Bank directives, and AML/CFT requirements.
  • Distribute relevant policy manuals, directives, and AML/CFT laws to staff.
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    • Ensure the branch is guarded at all times.
    • Maintain a clean and suitable environment for business.
    • Install a cash safe vault.
    • Display an outdoor advertising board with institution and branch details.
    • Display a copy of the company's business license and branch license.
    • Obtain a branch license from the National Bank within 30 working days of commencing operation.
    • Submit an application letter and completed notification form (Annex I) for a new branch license.
    • Apply for a new branch license within 30 working days after relocating a branch or changing its name.
    • Obtain written approval from the National Bank before closing a branch.
    • Notify concerned customers prior to branch closure and protect their interests.
    • Submit an application for branch closure at least 30 working days prior to the proposed closing date, justifying the reason and demonstrating closure preparations.
    • Return the original branch license to the National Bank upon closure.
    • Submit an application to the National Bank within six months from the effective date to obtain a license for all existing branches.

Rights and permissions

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  • Right to conduct capital goods finance business.
  • Right to open, relocate, and close branch offices upon compliance with directive requirements.
  • Right to receive a branch license from the National Bank.
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    • Right to customer protection during branch closure.

Restrictions

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  • Cannot open a new branch without prior approval and fulfilling minimum standards.
  • Cannot commence operation of a new branch without obtaining a branch license within 30 working days.
  • Cannot relocate or change the name of a branch without applying for and obtaining a new branch license within 30 working days.
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    • Cannot close a branch office without written approval from the National Bank.
    • Must notify customers and protect their interests before branch closure.

Objectives

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  • To ensure sound and prudent practices for branch office opening, relocation, and closure of capital goods finance companies.
  • To ensure the safety and soundness of capital goods finance companies.
  • To protect the interests of customers when a branch office is closed.

Organizations

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  • National Bank of Ethiopia

Legal references

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  • Capital Goods Leasing Business Proclamation No. 103/1998
  • Capital Goods Leasing Business (Amendment) Proclamation No. 807/2013
  • Requirements for Licensing of Capital Goods Finance Business Directives No. 284/2020
Original sourcehttps://justice.gov.et/en/directives/opening-relocation-and-closure-of-branch-offices-of-capital-goods-finance-companies-directive-no-953-2022/
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