As the effects of the Covid-19 on economies starts to manifest, some countries are adopting authoritarian measures aimed at remaining afloat. One or such is the new law imposed by the central bank of Ethiopia to control money in supply. Sources say that the National Bank of Ethiopia (NBE) has limited cash withdrawals for individuals and businesses from commercial banks and other financial institutions.
The limits aren’t without justification — National Bank Governor Yinager Dessie said in a briefing that it was basically “to manage liquidity as well as control money circulation that would help prevent crimes and tax evasion.”
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Accordingly, an individual can withdraw up to 100,000 Birr a day and half a million Birr in a month, while businesses will be allowed to withdraw a maximum of 200,000 Br a day but not exceeding one million Birr a month.
The bank has also asked residents to rely on e-payments and electronic transfers rather than using cash banknotes. Commercial banks were instructed to do away with fees on electronic payments for now as a matter of convenience to the citizens.
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Individuals and organizations that need to use more than the cash limit for a transaction or other purposes can make payments via account to account, a check, or a CPO, according to the governor.
The circular has already been communicated to all commercial banks in the country in a meeting the governor held at the central bank on Monday.
The directive allows bank presidents to make exceptions under certain circumstances and report such above the limit payments to NBE weekly.
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Any bank or microfinance institution in Ethiopia, which violates the directive, will be fined 25 percent of the amount it has paid as a penalty, the governor said
However, the directive gave discretion to presidents of financial institutions to approve cash withdrawals in excess of the stated amounts as an exception after reviewing evidence submitted by depositors supporting their demand.
The financial institutions are required to submit a weekly report showing details of excess cash withdrawals to the central bank no later than Tuesday of the following week.
This was followed by a proposal tabled to the central bank a few months ago, where the Ethiopian Bankers Association recommended a cash withdrawal limit as a solution for the existing liquidity crisis in the banking industry.
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According to the governor, the directive would help to cut withdrawal of stolen money recalling the stealing of over 60 million Birr late last year using fake bank cheques and forged documents.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry