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Central Bank Halves Reserve for Commercial Banks

Jun 14 , 2022

Regulators at the central bank have cut reserve requirements for commercial banks down by half to five percent.

It comes less than a year after the banking supervision directorate at the National Bank of Ethiopia (NBE) raised the requirement to 10pc of deposits. The reversal is hoped to ease the liquidity problem the industry faces. Finance Minister Ahmed Shide raised liquidity issues in the banking industry during question time in Parliament a couple of weeks ago.

Banks are compelled to keep their monthly average reserve-to-deposit ratio at no less than seven percent. The updated directive became effective last week.

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