Addis Ababa: Feb 3, 2016 – The National Bank of Ethiopia (NBE) has drafted a directive which sets priorities and establishes the “first come, first served” rule which should be observed by banks when allotting foreign currency, according to The Reporter.
The directive has shown more regards to ensuring the right amount of foreign currency assets to be maintained by banks. The directive sets the maximum and minimum threshold to 15 percent of the overall capital of the bank to hold at a single time to avoid banks from being incapable of settling their obligations they have approved in the form of a letter of credit (LC) without having enough currency.
In addition, the directive also strictly prohibits the practice of rewarding exporter clients by allocating large sum of forex for imports, hence forbidding exporters from utilizing more than 10 percent of their export proceeds.
Furthermore, the draft directive provides different organs and their responsibilities in the foreign exchange department of the bank stating the board of directors of the banks as the primary organ. It goes on to include the executive management team and the internal audit body as its other organs while explaining their responsibilities.