National Bank Of Ethiopia Increases Paid-up Capital For Banks
The National Bank of Ethiopia has (NBE) increased paid-up capital for banks. NBE now requires every commercial bank to have a minimum paid-up capital of 5 billion birr.
According to NBE this new move can make banks stronger and increase competition and it will be beneficial for the country. NBE believes that stronger banks will be able to bring a change in financial market and this new move will receive public confidence.
Paid-Up capital is the total amount of money that a bank’s shareholders have invested in the bank. it helps coping up with losses. NBE believes, through increasing the paid-up local, banks will improve which will enhance the economy.
Although NBE thinks increasing the paid-up for every bank will be beneficial for banks but not all private banks are welcoming this move. They are selling additional shares to existing and new investors. They are encouraging shareholders to increase their investments. Some banks are also planning to merge with other banks. Ethiopian Prime Minister and other Ethiopian federal government officials have been suggesting that Ethiopian private banks should merge to form a few strong banks.
