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Cheque Account Operation Directive No. 190-2021

Licensing and Supervision of Banking Business

Cheque Account Operation Directive No. 190-2021

WHEREAS, proper use of a cheque as payment instrument is crucial in facilitating smooth and cashless exchange of goods and services;

WHEREAS, cheque as a negotiable instrument is recognized and given legal protection under Ethiopian laws;

WHEREAS, the National Bank of Ethiopia is entrusted with the responsibility of creating and maintaining efficient, safe and sound payment systems;

WHEREAS, there is a need to determine the manner of proper operation of cheque of a bank and thereby to ensure its safety and credibility as the payment instrument;

NOW, THEREFORE, the National Bank of Ethiopia has issued these Directives pursuant to the authority vested in it by Article 27(2) of National Bank of Ethiopia Establishment Proclamation (as amended) No. 591/2008.

1.       Short Title

These Directives may be cited as “Cheque Account Operation Directives No. 190/2021”.

2.       Definition

For the purpose of these Directives:

3.       Scope of the Directives

The Provisions of these directives shall be applicable to all banks operating in Ethiopia.

4.       General Requirements

5.       Action to be Taken by a Bank Upon Dishonoring a Cheque

6.       Prohibiting Cases of Stop-cheque-payment Order

7.       Maintenance of Dishonored Cheques Register and Delinquent List

8.       Conditions for Deleting the Name of a Drawer from Delinquent List and Reinstatement

of Closed Cheque Account

payee(s) may appear in person to the National Bank and confirm in writing that the dishonored cheques have been fully settled in the form prescribed under Annex -I of these directives; or keep equivalent amount in a blocked account pending a call to collect the stated money within specified date and bank to be made by the drawer, at his own cost, to the payee in widely circulating newspaper at least once per week for three consecutive weeks;

9         Conditions for Allowing New Cheque Account Opening to a Person Prohibited Because

of Similar Name in the Delinquent List

10     Reporting and Information Sharing

  1. A bank shall send a report to the National Bank, Banking Supervision Directorate, regarding customers whose cheque accounts are closed in line with sub-article 5.3.1(b) of these directives in the form prescribed under Annex-IV, on the following five working days from the date of such closure.
    1. The National Bank shall compile the reports received from banks in line with the preceding sub-article of this article and circulate same in the banking industry, with a copy to the Federal Police Commission.
    1. The National Bank shall also circulate to the banking industry the name of cheque account holder deleted from the delinquent list in line with sub-article 8.1 of these directives.
    1. A bank shall circulate reports received from  the National Bank in line with sub-articles

10.2 and 10.3 hereinabove to all its branches within three working days from the date of receiving such reports; with a copy to the National Bank, Banking Supervision Directorate.

  1. A bank shall also circulate name of a drawer who has been recorded in the Dishonored Cheque Register in line with sub-articles 5.1.1(a), 5.2.1(a) and 5.3.1(a) of these directives at the end of every month to all its branches in the form prescribed under Annex-V to update respective branches database.

11     Repeal

Directive No. SBB/31/2002 is hereby repealed and replaced by these directives.

12     Effective Date

These Directives shall enter into force as of the 1st day of December 2016

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