← Back to briefingZenaHub.
Englishአማርኛ
Economy

Experts Urge NBE to Tighten Oversight Amid Banking Sector Expansion

Capital Ethiopia · 5 hours ago · Read the Full Story on Capital Ethiopia
Experts Urge NBE to Tighten Oversight Amid Banking Sector Expansion
AI SUMMARY

Financial experts are urging the National Bank of Ethiopia to strengthen supervisory capacity and enforce stricter regulations as commercial banks face growing interest-rate competition and liquidity vulnerabilities.

  • Financial experts are urging the National Bank of Ethiopia (NBE) to expand supervisory capacity and enforce stricter regulatory safeguards due to rapid financial sector growth.
  • NBE Vice Governor Solomon Desta issued Directive No. FS/SD/442/2026, prohibiting commercial banks from calculating, compounding, or paying savings account interest before deposit maturity.
  • The directive prevents banks from adding unearned interest to principal balances or making advance interest payments through digital or conventional channels.
  • Veteran financial expert Worku Lemma stated that advance interest payments create artificial liquidity and phantom cash reserves that are backed by no real cash reserves.
  • Some institutions raised long-term deposit rates between 24% and 26%, with certain contracts reaching as high as 30% to capture liquidity.
  • The NBE’s Financial Stability Report shows the banking industry’s aggregate liquidity ratio stood at 30.4%, which is more than twice the minimum regulatory threshold.
  • A liquidity stress test found that 16 commercial banks failed the regulator’s liquidity sensitivity assessment for the financial year ending June 2025.
  • The Commercial Bank of Ethiopia accounts for roughly half of sector assets and passed major stress tests conducted at the end of June 2025.
  • Former NBE regulator Yisehak Teka Nibere stated that the central concern is weaknesses in asset-liability management and credit governance rather than cash shortages.
  • The NBE fully removed the annual private-sector credit-growth cap in July and raised its policy rate from 15% to 16%.
Read the Full Story on Capital Ethiopia
Related
Study Highlights Infrastructure Gaps and Heavy Workload for Judges in Federal Courts
The Reporter (Amharic) · 3 hours ago
Ethiopia Identified Among Countries Facing Rising Poverty Due to Conflict
The Reporter (Amharic) · 4 hours ago
IMF Revamps Financial-Sector Assessments as Africa Faces New Digital and Debt Risks
Capital Ethiopia · 5 hours ago
Ethiopia Excluded from Global 2026 Tourism Index Amid Record Growth
Capital Ethiopia · 5 hours ago