The new directive which is applicable to all banks and microfinance institutions went into effect yesterday, May 19, 2020.
National Bank of Ethiopia (NBE) limits daily and monthly cash withdrawals for individuals and businesses firms in a bid to curtail illegal transactions, combat tax evasion, and money laundering in the market system.
Speaking to media, Dr. Yinager Dessie, Governor of National Bank of Ethiopia noted that NBE is working with all banks and stakes to ensure safe transactions.
The new directive is believed to help the nation to ensure healthy money transactions in all banks and microfinance institutions.
According to the directive, an individual can withdraw up to 200,000 Birr per day and one million birrs in a month. Meanwhile, companies will be allowed to withdraw up to 300,000 birrs in a day and 2.5 million Birr in a month.
Individuals or businesses that need to withdraw cash beyond the set limit for a transaction or other purposes can make payments from account to account, in cheques or CPO, he said.
According to him, Central Bank issued this directive to diversify the paying system by limiting paper cash transactions aiming to control cash circulation outside of banks, liquidity management, and reducing printing costs.
The NBE is also working to address any kind of inconvenience with special engagement; but if any bank or financial institution is found flouting the directive, it will face a 25 percent penalty of the total payment it has made, according to the governor.
He noted that NBE had been leading in producing the directive in line with the practices of other countries and the Ethiopian Bankers’ Association believed to address the liquidity crisis that occurred across the banking sector.