Issuing Authority

These directives are issued by the National Bank of Ethiopia pursuant to the authority vested in it by Article 41 of the Monetary and Banking Proclamation No. 83/1994 and by article 25 of the Licensing and Supervision of the Business of Micro-financing Institutions Proclamation No. 40/1996.

Definitions

"Deposits shall mean any regular or irregular savings which may be withdrawn partially at any time by the account holder;

"Savings" shall mean non-withdrawable mandatory or regular savings of members of a micro-financing institution;

"Total Capital" shall mean the sum of paid-up capital, donated capital, retained earnings and any other free reserves of a Micro-finance institution;

"Total Deposits" shall mean the sum of "savings" and "deposits";

"Total Risk-weighted Assets" shall mean assets of a Micro-finance institution determined by weighting each asset item by the weight assigned to it and aggregating the result so obtained in accordance with the table attached herewith which shall be a part hereof.

Minimum Requirement

A Micro-finance Institution shall maintain at all times a minimum capital ratio of 12%(twelve percent) computed as a ratio of total capital to total risk-weighted assets.

For the purpose of monitoring compliance with the requirement set out under 3.1 herein above, each micro-finance institution shall submit to the Supervision Department of the National Bank of Ethiopia a quarterly Capital Position report within three weeks after the close of each quarter in the manner shown in the attached table.

Scope of Application

The provisions of these directives shall be applicable only on Micro-finance Institutions which have re-registered with the National Bank of Ethiopia in line with article 10 of the Licensing and Supervision of the Business of Micro financing Proclamation No. 40/1996 and micro-finance institutions whose total deposits equal or exceed birr 1 (one) million.

Effective Date

These directives shall come into force as of the 1^st day of May 2002.

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