Micro-Financing Business Proclamation (No. 626/2009)

1 — Short Title

1. Short Title 1. ጭ‫ץ ץ‬ዕ ይֱ ዋጅ “‫ ـ‬የፋይ ‫ ףם‬ዋጅ This Proclamation may be cited as the “Micro- ‫ּׁש‬ጥ‫ ץ‬6)!6/21” ‫ـ‬#ֹ ֵጠ ‫ ׂש‬ይ٤ֶָ፡፡ Financing Business Proclamation No. 626/2009”

2. Definitions 2. ُ‫ץ‬ጓ‫ה‬ የEִ ግ‫ֹו‬# ֶַ ُ‫ץ‬ጉ‫ ו‬የ‫ג‬ያ‫ר‬ጠው ካֲָ In this Proclamation, unless the context requires ‫ ץׂשـ‬ዚֱ ዋጅ ውጥ፤ otherwise: ÃNÇ êU nU¶T Uz¤È ±.œ.q.Ü *¹þ1 Unit Price Negarit G. P.O.Box 80001 gA 4¹þ7)4 ØÁ‰L U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4704 1/ “ፈEድ የ‫רـ‬ጠው ‫ ֳُד ”וּהـ‬#‫׀‬ 1/ “authorized institution” mean any financial ‫ף‬ዊ ‫ ֹו‬ክ ‫ ـ‬የፋይ ‫ ףם‬እ ዲ institution licensed by National Bank to carry on ‫ ףר‬ፈEድ የ‫רـ‬ጠው ‫ْ ד‬ው‫ ו‬የፋይ micro-financing business; ‫ וּהـ‬ው፣ 2/ “ዋ ‫ ףם‬ፈፃ‫ْ ד ֳُד ”ג‬ው‫ו‬ 2/ “chief executive officer” mean a person, by የ‫ד‬ዕ‫נ‬ግ ‫ ו‬የ‫ג‬ጠ‫ ֲּת וף‬የ ድ whatever title that person may be referred to, ‫ ـ‬የፋይ ‫ וּהـ‬የዕֳُ ‫ـ‬ዕֳُ who is primarily responsible for the day-to-day ‫ףם‬ዎ٤ ዋ ٪ֶፊُ የ‫ُףוא‬ management of the affairs of micro-financing ‫ָם‬ጣ የ‫רـ‬ጠው ‫ר‬ው ው፣ institution; 3/ “ኩ‫ ֹו‬ያ” ‫ُ ֳُד‬ዮጵያ የ ግድ ׁግ ‫ ُנטא‬የ‫רـ‬ጠው ُ‫ץ‬ጓ‫ ה‬የያዘ ֲ` 3/ “company” mean a share company as defined ክ‫ת‬ዮ`٠ ‫ִב‬ ُዮጵያውያ under the Commercial Code of Ethiopia in which the capital is wholly owned by Ethiopian ወይ‫ُ ִב ו‬ዮጵያውያ ‫ֳֹו‬dُ nationals or organizations wholly owned by ُ ‫ בּהּהـ‬ድ‫ץ‬ጅِ٤ የ‫ـ‬ያዘ ُዮ Ethiopian nationals, and registered under the ጵያ ׁግ ‫ ُנטא‬የ‫אـ‬ዘገ ዋ ‫םא‬ laws of, and having its head office in Ethiopia; ‫ע‬ያ dً ُዮጵያ የֲ ክ‫ת‬ዮ ‫٭ד‬ ‫ ץ‬ው፣ 4/ “compulsory savings” mean mandatory deposits 4/ “የግዴٍ ‫ּׁש‬ጠ‫ ֳُד ”ֹו‬ገ ዘ‫ ּש‬የ‫ּבג‬ made for the purpose of enabling the individuals ጥ‫ ּُש‬ግֳ‫ר‬j٤‫ֲ ו‬k ‫ּש‬ድ`٤ ፈEድ or groups making the savings to qualify to ከ‫רـ‬ጠው ‫ וּהـ‬#ድ‫אֳ ץ‬ው‫ר‬ድ #‫ּׁש‬ receive loans from an authorized institution and ֳ‫ֲא‬ ֳ‫ג‬ያገlُ #ድ‫א ץ‬ያዣُ to serve as collateral against the loans so እ ዲያገֳግָ ግዴٍ የ‫ג‬ያ‫וׂש‬ጡُ obtained; የ‫ּׁש‬ጠ‫ ֹו‬ገ ዘ# ው፣ 5/ “ዳይ‫פ‬ክ‫ْ ד ֳُד ”ץـ‬ው‫ ו‬የ‫ד‬ዕ‫נ‬ግ 5/ “director” mean any member of the board of ‫ ו‬የ‫ג‬ጠ‫ ـ ו ֲּת ף‬የፋይ directors of a micro-financing institution, by ‫ וּהـ‬የዳይ‫פ‬ክ‫צـ‬٤ j‫ץ‬ድ ‫ ָֹו‬ው፣ whatever title he may be referred to; 6/ “የፋይ ‫א ֳُד ”וּהـ‬ድ ‫ר‬ጪ 6/ “financial institution” mean insurance company, ኩ‫ ֹו‬ያ፣ ‫ ֹו‬ክ፣ ‫ ـ‬የፋይ bank,micro-financing institution, postal savings, ‫וּהـ‬፣ የፖٍ ‫ּׁש‬ጠ‫ ֹו‬ድ‫ץ‬ጅُ፣ የּዋֶ money transfer institution or such other similar ድ‫ץ‬ጅُ ወይ‫ ו‬#‫ף׀‬ዊ ‫ ֹו‬ክ የ‫ג‬ወ‫ר‬ institution as determined by the National Bank; ֶַ ‫אـ‬uuይ ድ‫ץ‬ጅُ ው፣ 7/ “financial lease” mean a type of leasing by which a lessor provides a lessee against payment of mutually 7/ “የፋይ ኪ‫ף‬ይ” ‫ ֳُד‬ከ‫ף‬ዩ፣ agreed installments over a specified period with the use of specified capital goods which is: x/ ‫ׂש‬ደ‫ ָת ו‬ይዞُ የ‫ג‬ገ{ው የካፒ a) either already acquired by the lessor; or ָٍ ዕE፣ ወይ‫ו‬ ֳ/ ‫ـ‬ከ‫ף‬ዩ ‫ףא‬ጭُ 7‫ـ ּתף‬#ֹ b) purchased by the lessor from a third party, ከ‫ג‬ጠ‫ף‬ው ‫ ـמ‬ወገ የ‫ג‬ገዛው known as the supplier, chosen and specified by የካፒָٍ ዕE፣ the lessee; ‫ـ‬ከ‫ף‬ዩ ‫ـ‬ወ‫ ר‬ጊዜ ውጥ ‫ـ‬ከፍֹ የ‫ג‬ያָ7 and under which the lessor shall retain full ֳً ወገ`٤ ‫ ُוו‬የ‫ـ‬ወ‫ ר‬ክፍያ ‫ـ‬ወ ownership right on the capital goods during the ‫ ר‬ጊዜ ‫א‬ፈጸ‫ ו‬እ ዲጠ‫ ُוׂש‬የ‫ג‬ያከ‫ף‬ period of the lease agreement, and subject to ይُ፣ የኪ‫ף‬ይ ‫ ًוו‬ጸ ِ ‫ּבג‬ይُ agreement between the two parties, the lessee may ጊዜ ውጥ ከ‫ף‬ዩ ካፒָٍ ዕEው ֶይ ‫ִב‬ have an option to purchase the capital good outright የ‫ֳֹו‬dُُ ‫א‬#ُ ይዞ የ‫ּבג‬ይُ የኪ‫ף‬ይ after the termination of the lease period at an agreed ዘ‫א‬k ‫ת‬ያE ֳً‫ ו‬ወገ`٤ ከ‫ـ בדـ‬ከ ‫ף‬ዩ የካፒָٍ ዕEው ֵገዛ የ‫ג‬٤ָُ የኪ price; ‫ף‬ይ ዓይُ ው፣ gA 4¹þ7)5 ØÁ‰L U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4705 8/ “የu# ዓ‫ ֳُד ”ُא‬እ ደ ው‫צ‬ፓው 8/ “financial year” mean the financial year of a ያ ዘ‫ּב א‬ጣጠ‫ ץ‬ከጁֶይ 1 ‫ ׂש‬ጀ‫צו‬ micro-financing institution running from July1st ‫ׂש‬ጣዩ ዓ‫ ُא‬ጁ " ‫ ׂש‬የ‫ג‬ያE የ to June 30th of the following year; ‫ ـ‬የፋይ ‫ וּהـ‬የ‫כ‬# ዓ‫ ُא‬ው፣ 9/ “group guarantee” mean a guarantee 9/ “የ‫ּש‬ድ ዋُ ” ‫ ֳُד‬የ‫ּש‬ድ ‫ـ‬ዳ‫ע‬ mechanism whereby a group of borrowers ዎ٤ ከ‫א‬ካከֶْው ዳْው ፈEድ ከ‫רـ‬ undertake to be liable jointly and severally for ጠው ‫ וּהـ‬የ‫ـ‬ደ‫נ‬ው ያָከፈֳ እ ደ the repayment of a loan taken from an ֲ #ድ‫אֳ ׳ָא ס‬ክፈָ ድُ authorized institution in the event of default by ‫ ـ‬ጠָ ٪ֶፊ የ‫ֲג‬kُ የዋُ any one of them; ‫ ץףר‬ው፣ 0/ “‫ ـ‬የፋይ ‫ ֳُד ”ףם‬ፈEድ 10/ “micro-financing business” mean the provision ‫רـ‬ጠው ‫ד וּהـ‬ካይُ ዚֱ ዋጅ of financial services as specified under Article ‫ׂש‬ጽ 3/2/ ֶይ የ‫ـ‬ዘ‫נ‬ዘ‫ףם ُס‬ዎ٤ 3(2) of this Proclamation by authorized ַֹ٤ ‫ـ‬ዛ‫ד‬ጅُ ያֶْው ‫ـ‬ግ‫ُףֹו‬ institution; የ‫ג‬ያጠEָָ የ ግድ ‫ ףם‬ው 11/ “micro-financing institution” mean a company 01/ “‫ ـ‬የፋይ ‫ ֳُד ”וּהـ‬ገጠ licensed under this Proclamation to engage in ‫ ֲ וץ‬ከ‫ ـ דـ‬የፋይ micro-financiing business in rural and urban ‫ ףם‬ዚֱ ዋጅ ‫ׂש‬ጽ 3/2/ ‫ـ‬ጠ areas and other activities specified under ‫ַֹ ُשׂש‬٤ ‫ףם‬ዎ٤ ֳ‫ ُףדרא‬ዚֱ Article 3(2) of this Proclamation; ዋጅ ‫ ُנטא‬ፈEድ የ‫רـ‬ጠው ኩ‫ ֹו‬ያ ው፤ 02/ “#‫ף׀‬ዊ ‫ ֹו‬ክ” ‫ ֳُד‬የُዮጵያ #‫׀‬ 12/ “National Bank” mean the National Bank of ‫ף‬ዊ ‫ ֹו‬ክ ው፤ Ethiopia; 03/ “‫ר‬ው” ‫ ֳُד‬የ‫ـ‬ፈጥ‫ צ‬ወይ‫ׁ ו‬ግ የ‫ר‬ው 13/ “person” mean any natural or juridical person; ُ ‫א‬#ُ የ‫רـ‬ጠው ካָ ው፤ 04/ “የ٤ֹٍ ‫אא‬ዘ” ‫ ֳُד‬#‫ף׀‬ዊ ‫ ֹו‬ክ 14/ “qualification of competency” mean required ‫ג‬ያወጣው ‫עאא‬ያ የ‫ג‬ወ‫ـ ר‬ፈֶጊ education, experience, fitness and propriety as የُ‫ ُץֱו‬ደ‫נ‬ጃ፣ የ‫וָ ףם‬ድ፣ የ#E prescribed by directives to be issued by the ُ የ‫ם‬-‫ו‬ግ‫אא ץֹו‬ዘ ው፤ National Bank; 15/ “receiver” mean the National Bank or a person 05/ “‫ז‬ግዚُ” ‫ ֳُד‬#‫ף׀‬ዊ ‫ ֹו‬ክ ወይ‫ ו‬#‫׀‬ appointed by the National Bank to take control of a ‫ף‬ዊ ‫ ֹו‬ክ የ‫ר אـ‬ው ‫ـ ֲת‬ግ‫ וסֹו‬٤ግ‫ץ‬ problem micro-financing institution for the purpose ያֳُ ‫ ـ‬የፋይ ‫נא וּהـ‬ከ# of restructuring its operations in order to make it ‫ סףר‬እ ደገ ‫ד‬ዋ‫ בּהـ ץׂש‬ጤ ‫ד‬ sound or to terminate the existence of such ‫ד‬ድ‫נ‬ግ ወይ‫ד ו‬ፍ‫ נ‬ው፤ institution; 16/ “voluntary savings” mean any deposit made 06/ “የውዴٍ ‫ּׁש‬ጠ‫ד ּשכֳֹו ֳُד ”ֹו‬ with an authorized institution, which may be ْው‫ ו‬ጊዜ ‫ ִב‬ወይ‫ ו‬ከፊָ ֵወጣ withdrawn partially or totally at any time by the የ‫ג‬٤ָ ፈEድ ‫רـ‬ጠው ‫ וּהـ‬ውጥ account holder; ‫דׂשـ‬ጭ የֲ ገ ዘ# ው፤ 17/ “senior officer” mean any officer of a micro- 07/ “ከፍ‫ ـ‬የ‫ ףם‬٪ֶፊ” ‫ ֳُד‬የዋ ‫ףם‬ finance institution who is deputy to the chief ፈፃ‫ו ג‬ክָُ የֲ ወይ‫ـ ו‬ጠ‫ًע‬ executive officer or is directly reporting to the ‫ׂש‬ጥٍ ֳዳይ‫נ‬ክ‫צـ‬٤ j‫ץ‬ድ የֲ ‫ ד‬ board of directors. ው‫ ו‬የ‫ ـ‬የፋይ ‫ וּהـ‬የ‫ףם‬ ٪ֶፊ ው፣ 18/ any expression in the masculine gender includes 08/ ‫ ד‬ው‫ ו‬ወ ድ ጾٍ የ‫ـ‬ገ‫נ‬ው ገֳֶጽ the feminine. ‫ ו ُױ‬ይጨ‫ָףו‬፡፡ gA 4¹þ7)6 ØÁ‰L U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4706 3. ‫ ـ‬የፋይ ‫ ُדּהـ‬ዓֶ‫ـ ד‬ግ‫ץֹו‬ 3. Purpose and Activity of Micro-Financing Institutions 1/ የ‫ ـ‬ፋይ ‫ וּהـ‬ዋ ዓֶ‫ ד‬ገ 1/ The main purpose of a micro-financing ዘ# ‫רא‬#‫ר‬# ገጠ‫ ץ‬ከ‫ דـ‬ግ# institution shall be to collect deposits and ‫ ץ‬፣ ጥE7 ‫ ـ‬የ‫א ףם‬ኮ٤ extend credit to rural and urban farmers and እ ዲ‫ַֹ ו‬٤ ‫ףם ָרא‬ዎ٤ ֳ‫רـ‬ people engaged in other similar activities as well as micro and small scale rural and urban ‫ר סד‬ዎ٤ ጣ‫ע‬ያው #ְ‫ף‬ዊ ‫ ֹו‬ክ የ‫ג‬ወ entrepreneurs, the maximum amount of which ‫ ר‬#ድ‫א ץ‬ጠُ ይֲ ָ፡፡ may be determined by the National Bank. 2/ ዚֱ ዋጅ የ‫ـ‬ደገጉُ ٍዎ٤ እ ደ‫ـ‬ 2/ Subject to conditions set under this ጠ‫ֲ ּׁש‬ው፣ ‫ْ ד‬ው‫ ـ ו‬የፋይ Proclamation, a micro-financing institution may ‫ וּהـ‬የ‫ג‬ከ‫ ִב ִُـ‬ወይ‫ו‬ engage in some or all of the following: ከፊָ ֵያከ ው ይ٤ֶָ፡- x/ የውዴٍ‫ ֲ ו‬የግዴٍ ‫ּׁש‬ጠ‫ֹו‬፣ ‫ـ‬ a) accepting both voluntary and compulsory ጠየ‫ ׂש‬ጊዜ የ‫ג‬ከፈָ እ ዲ‫ ו‬የጊዜ savings as well as demand and time deposits; ገደ# ‫דׂשـ‬ጭ ‫ָׂשא‬፣ ֳ/ ገጠ‫ ץ‬እ ከ‫ דـ‬ግ#‫ ץ‬እ ַ b) extending credit to rural and urban farmers ֹ٤ ‫ףם‬ዎ٤ እ ዲ‫ ו‬ገጠ‫ ץ‬ከ and people engaged in other similar ‫ דـ‬ጥE7 ‫ ـ‬የ‫א ףם‬ኮ٤ activities as well as micro and small-scale ֳ‫ר סדרـ‬ዎ٤ #ድ‫א ץ‬ጠُ፤ rural and urban entrepreneurs; ּ/ ُዮጵያ ውጥ የ‫ג‬ከፈִ የዋֶ c) drawing and accepting drafts payable within Ethiopia; ‫ר‬ዶ٤ ‫ד‬ውጣُ ‫ָׂשא‬፤ ‫א‬/ #‫ף׀‬ዊ ‫ ֹו‬ክ ‫ג‬ያወጣው ‫עאא‬ያ d) micro-insurance business as prescribed by ‫ُנטא‬ ‫ـ‬ የ‫א‬ድ ‫ףם‬ directive to be issued by the National Bank; ‫ُףםא‬፤ ‫ט‬/ ዓֶ‫ْד‬ው ገ‫ד ּת‬ገ{ُ የֲ እ ደ e) purchasing income-generating financial ግ‫ו‬ጃ dُ ‫ר‬ዶ٤ እ ַֹ٤ የጭ‫ץ‬ instruments such as treasury bills and other ጊዜ የ ግድ ወ‫ׂِשנ‬٤ #‫ף׀‬ዊ ‫ ֹו‬ክ short term instruments as the National ‫ג‬ወው ‫א ُנטא‬ግዛُ፤ Bank may determine as appropriate; ‫נ‬/ ‫ףם‬ው የ‫ג‬ያከ ው ‫ֹْו‬ው ׁ ፃዎ٤ f) acquiring, maintaining and transferring any ጨ‫ْ ד צו‬ው ‫ ו‬የ‫ׂש ג‬u‫ ׂש‬የ‫ד‬ movable and immovable property including ይ ‫ׂש‬u‫ ׂש‬#‫ֳֹו ُנ‬dُُ ‫א‬ያዝ premises for carrying out its business; ‫ א‬ከ‫ֹו‬ከ# ֳַֹ٤ ‫ֳֶـד‬ፍ፤ ‫ר‬/ ከ‫דـ‬ ገጠ‫ ץ‬ጥE7 ‫ـ‬ g) supporting income generating projects of የ‫א ףם‬ኮ٤ የ‫ר סדרـ‬ዎ٤ የ‫ג‬ያካ urban and rural micro and small scale ዷْው ገ‫ ּת‬የ‫ג‬ያገl ፕ‫צ‬ጀክِ٤ operators; ‫ד‬ገዝ፤ ₪/ ֳደ ٤ የ‫ץףא‬፣ የገያ፣ የَክ h) rendering managerial, marketing, technical ክ ‫ـ‬ዳደ‫ף‬ዊ ‫ו‬ክ‫א ץ‬ጠُ እ and administrative advice to customers and ዚֱ‫א ו‬ኮ٤ ገָግֹِ٤ ֳ‫ד‬ግ{ُ assisting them to obtain services in those እ ዲ٤ִ ‫ד‬ገዝ፤ fields; ‫ׂש‬/ ֳጥE7 ֳ‫ ـ‬የ ግድ ‫ףם‬ዎ٤ i) managing funds for micro and small scale ዓֶ‫ ד‬የ‫ג‬ውָ ገ ዘ# ‫ـד‬ዳደ‫ץ‬፤ businesses; j) providing local money transfer services; / የxገ‫ץ‬ ውጥ ּዋֶ ገָግֹُ ‫א‬ጠُ፤ gA 4¹þ7)7 ØÁ‰L U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4707 ‫ـ‬/ የፋይ ኪ‫ף‬ይ ገָግֹُ ካፒָٍ k) providing financial leasing services to ዕE ኪ‫ף‬ይ ግድ ‫ ףם‬ዋጅ ‫ּׁש‬ጥ‫ץ‬ peasant farmers, micro and small-scale 1)3//09)( ‫ ׳ץֳ ُנטא‬ደ‫צ‬٤ እ ዲ urban and rural entrepreneurs in accordance ‫ ו‬ገጠ‫ ץ‬ከ‫ דـ‬ጥE7 with the Capital Goods Leasing Business ‫ ـ‬የ‫א ףם‬ኮ٤ ֳ‫ר סדרـ‬ዎ٤ Proclamation No. 103/1998; and ‫א‬ጠُ፤ እ l) engaging in other activities as specified by ْ/ #‫ף׀‬ዊ ‫ ֹו‬ክ የጊዜው ‫ג‬ያወጣ directives of the National Bank from time to ْው ‫עאא‬ያዎ٤ ‫ג‬ወ‫ר‬k ַֹ٤ time. ‫ףם‬ዎ٤ ‫ُףדרא‬፡፡ PART TWO ክፍָ ֳُ ֳ‫ ـ‬የፋይ ‫ ףם‬ፈEድ LICENSING MICRO-FINANCING BUSINESS 4. ፈEድ የ‫ד‬ውጣُ ፈֶጊُ 4. Requirement of Obtaining License 1/ ‫ ד‬ው‫ר ו‬ው ከ#‫ף׀‬ዊ ‫ ֹו‬ክ ፈEድ ካֶ ገ{ ‫ץׂשـ‬፣ ‫ ـ‬የፋይ ‫ףם‬ 1/ It is prohibited to engage in micro-financing ֶይ ‫ ُףדרא‬ይ٤ָ‫ו‬፤ ֲ`‫ ו‬ግ‫ֹו‬# business without obtaining a license from the ‫ֳֹו‬ው ׁግ ፈEድ የ‫רـ‬ጣْው ‫ ֹו‬ኮ٤ የ‫ـ‬ National Bank; provided however, that banks ֳየ የ‫ ףם‬ፈEድ uያፈָጋْው licensed under the appropriate law may engage in micro-financing business without a separate ‫ ـ‬የፋይ ‫ֶ ףם‬ይ ֵ‫ סדר‬ይ٤ micro-financing business license. ִֶ፡፡ 2/ ዚֱ ‫ׂש‬ጽ ዑ ‫ׂש‬ጽ /1/ የ‫ـ‬ደገገው 2/ Where the National Bank has reason to believe that a ‫ֳֶـא‬ፍ ‫ْ ד‬ው‫ר ו‬ው ‫דׂשـ‬ጭ ገ ዘ# person, in contravention of sub-article (1) of this ֳ‫ٍד ָׂשא‬ወ‫ּׂש‬ያ ወይ‫ד ו‬ግ‫ּתֹו‬ያ ዘዴ Article, is advertising for or soliciting deposits of ‫א‬ጠ‫ בׂש‬ወይ‫ ـ ו‬የፋይ ‫ףם‬ money or transacting micro—financing business, it እያካְደ ‫ֲא‬k #‫ף׀‬ዊ ‫ ֹו‬ክ ֳ‫אד‬ may, in order to ascertain the situation, require that ‫ו‬ክ ያُ ‫נ`ת‬ው ይֱ k ٍ ֳ‫ד‬ጣ‫ُף‬ all books, munutes, accounts, cash, securities, records, vouchers and other documents which are in ‫ ֹו‬ኩ ዚ ‫ר‬ው ይዞٍ ‫ ץם‬የ‫ג‬ገlُ የu# the possession or custody of such person be ‫א‬ዝገj٤፣ Eֳ ጉ‫ֹו‬ኤ፣ ጥ‫ פ‬ገ ዘ#፣ የዋُ submitted to it and inspect or cause the inspection of ‫ר‬ዶ٤፣ የገ ዘ# ‫ד‬ዘዣዎ٤ እ ַֹ٤ ‫ר‬ዶ٤ the same. እ ዲ‫ֳּُשץׂש‬ ֳ‫ד‬ድ‫נ‬ግ ֳ‫ץאץאא‬ ወይ‫ ץאץאדֳ ו‬ይ٤ֶָ፡፡

5 — Conditions of Licensing

5. Conditions of Licensing 5. የፈEድ 7ድ‫ٍ א‬ዎ٤ 1/ ‫ ـ‬የፋይ ‫ ףם‬ፈEድ ֳ‫ד‬ግ{ُ 1/ The following conditions shall be fulfilled to የ‫ג‬ከ‫ ִُـ‬7ድ‫ٍ א‬ዎ٤ ‫ֶُחא‬ secure a micro-financing business license: ֳ‫ֹْו‬ው፡- a) a duly completed application in the prescribed x/ ‫ג‬ገ‫ ֹו‬የ‫ ֶזـ‬የፈEድ ‫א‬ጠየ‫ּׂש‬ያ 7ጽ format and other accompanying documents as #‫ף׀‬ዊ ‫ ֹו‬ክ የ‫ג‬ጠይEْው ַֹ٤ specified by the National Bank shall be ‫ר עֹו‬ዶ٤ ‫א‬7‫נ‬# ֳ‫ֹْו‬ው፤ submitted; ֳ/ ‫ָאד‬ከ٢ ‫ץׂשג‬#ُ ጊዜ #‫ף׀‬ዊ b) an investigation fee, as specified by the ‫ ֹו‬ክ የ‫ـ‬ወ‫ר‬ው የ‫ר‬ድ ‫עאץאא‬ያ National Bank, shall be paid at the time of ክፍያ ‫א‬ከፈָ ֳُ፤ submitting the application; c) the institution shall be formed as a company ּ/ ‫ בּהـ‬ኩ‫ ֹו‬ያ ‫ָא‬ክ ‫ וּהּהא‬የ‫א‬ and its memorandum and articles of ‫נםא‬٢ ጽֽፉ የ‫ـא‬ዳደ‫ע‬ያ ደ ‫ּש‬ association shall be approved by the National ‫ֳאג‬ከ‫ـ‬ው የ‫ א‬ግ‫ ُם‬ካָ ከ‫אא‬ Bank before registration with the appropriate ዝገ‫ ּש‬ፊُ #‫ף׀‬ዊ ‫ ֹו‬ክ ‫א‬ጽደ7 government organ; ֳُ፤ gA 4¹þ7)8 ØÁ‰L U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4708 ‫א‬/ ‫בּהـ‬ያወጣْው ክ‫ת‬ዮ`٤ ‫ִב‬ d) all its issued shares shall be subscribed የ‫ـ‬ፈ‫ֲ בנ‬ው ከእዚ‫ ו‬ውጥ and, at a minimum, a quarter of the ‫ּת‬ያ ‫ ּשס‬ጥ‫ פ‬ገ ዘ# የ‫ـ‬ከፈֳ subscribed shares shall be fully paid in ‫ֳُ ֲא‬፤ cash; e) the minimum paid-up capital prescribed ‫ט‬/ #‫ף׀‬ዊ ‫ ֹו‬ክ የ‫ـ‬ወ‫ר‬ው ዝ7‫ـ‬ by the National Bank shall be paid in cash የ‫ـ‬ከፈֳ ካፒָٍ ጥ‫ פ‬ገ ዘ# ‫א‬ከ and deposited in a blocked account in a ፈָ ‫ֶ ٍנםו‬ይ ‫ֳֹו‬ው ‫ـ‬ bank in the name of the prospective የፋይ ‫ ו וּהـ‬ዝግ የ‫ ֹו‬ክ micro-financing institution; u# ውጥ ‫אׂשא‬ጥ ֳُ፤ ‫נ‬/ የ‫ בּהـ‬ዳይ‫פ‬ክ‫צـ‬٤ ዋ ው ‫ףם‬ f) the directors and the chief executive ፈጻ‫ ג‬#‫ף׀‬ዊ ‫ ֹו‬ክ ያወጣው officer of the institution shall meet the የ٤ֹٍ ‫אא‬ዘ የ‫ג‬ያ‫א§ ִח‬ qualification of competency prescribed by ٍْው #‫ף׀‬ዊ ‫ ֹו‬ክ የፀደ‫ׂש‬ the National Bank and their appointment ‫ֳُ ֲא‬፡፡ shall be approved by the National Bank. 2/ ዚֱ ‫ׂש‬ጽ ዑ ‫ׂש‬ጽ /1/ የ‫ـ‬ዘ‫נ‬ 2/ Without prejudice to the requirements specified ዘ‫ ُס‬እ ደ‫ـ‬ጠ‫ֲ ּׁש‬ው፣ የ‫ ـ‬የፋ under sub-article(1) of this Article, the ይ ‫ ףם‬ፈEድ ‫ـ‬ጨ‫ עד‬ግዴٍዎ٤ National Bank may issue directives to ֳ‫א‬ደ ገግ #‫ף׀‬ዊ ‫ ֹו‬ክ ‫עאא‬ያ ֵያ presceibe additional conditions of licensing. ወጣ ይ٤ֶָ፡፡ 6. ፈEድ ֳ‫א‬ጠُ 6. Issuance of License 1/ The National Bank shall decide on a micro- 1/ #‫ף׀‬ዊ ‫ ֹו‬ክ ዚֱ ዋጅ ‫ׂש‬ጽ 5 financing business license application within ‫א ُנטא‬7‫נ‬# ያֳ‫ֹْו‬ው ‫נא‬ጃዎ٤ 60 days from the last date of receipt of all ‫ـָחـ‬ው ከ‫ ׂש ּُשנׂש‬ጀ‫ ִֹُו צו‬% information to be submitted in accordance with ‫ ُ ׂש‬ውጥ ‫ ـ‬የፋይ ‫ףם‬ Article 5 of this Proclamation. ፈEድ ‫ָאד‬ከ٢ው ֶይ ውu ይ‫ר‬ጣָ፡፡ 2/ ፈEዱ የ‫רג‬ጠው #‫ף׀‬ዊ ‫ ֹו‬ክ የ‫ـ‬ወ 2/ The license shall be issued upon pryment of ‫ר‬ው የፈEድ ክፍያ ‫ת‬ከፈָ ይֲ ָ፡፡ the licensing fee prescribed by the National Bank. 3/ ዚֱ ዋጅ ‫ ُנטא‬#‫ף׀‬ዊ ‫ ֹו‬ክ የ‫רـ‬ጠ 3/ A license granted by the National Bank pursuant ፈEድ ‫ ـ‬የፋይ ‫דֳ ףם‬ካְድ to this Proclamation shall constitute final የ‫ג‬ያ٤ָ የ‫א‬ጨ‫נ‬ªው ፈEድ ይֲ ָ፡፡ authorization to carry on a micro-financing business. 4/ #‫ף׀‬ዊ ‫ ֹו‬ክ ዚֱ ዋጅ ‫ׂש‬ጽ 5 ዑ ‫ׂש‬ጽ /2/ ‫ ُנטא‬የፈEድ ٍዎ٤ ‫ת‬ያ 4/ Where the National Bank amends the conditions of ª«ָ ‫ד‬ªªያው ‫ֶ ףם‬ይ እ ዲውָ ከٍ‫ר‬ licensing in accordance with sub article (2) of ُ ጊዜ ‫ֶר‬u ‫ׂש ׂש‬ደ‫ ו‬#ֹ የ‫ֳאג‬ከ Article 5 of this Proclamation, it shall notify the ٍْው ‫ ـ‬የፋይ ‫זּהـ ףם‬٤ እ amendments to the concerned micro-financing institutions thirty days before the date on which the ዲያው‫ ּׁُש‬ይደ‫נ‬ጋָ፡፡ amendment becomes effective. 5/ #ְ‫ף‬ዊ ‫ ֹו‬ክ ‫ג‬ያወጣው ‫עאא‬ያ ‫טא‬ 5/ In accordance with the directive to be issued by ‫ ـ ُנ‬የፋይ ‫ ُדּהـ‬7‫ץ‬ the National Bank, micro-financing institutions ጫፎ٤ ‫א‬ክፈُ ይ٤ִֶ፡፡ may open branches.

7 — Renewal of License

7. Renewal of License 7. የፈEድ ዕድuُ The National Bank may issue directives on #‫ף׀‬ዊ ‫ ֹו‬ክ ‫ ـ‬የፋይ ‫ ףם‬ፈEድ conditions of renewal of micro-financing business የ‫ٍג‬ደُ ٍ ‫עאא‬ያ ֵወ ይ٤ֶָ፡፡ license. gA 4¹þ7)9 ØÁ‰L U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4709 8. ፈEድ ֳ‫נרא‬ዝ 8. Revocation of License 1/ #‫ף׀‬ዊ ‫ ֹו‬ክ የ‫ ד‬ው ‫ـ ו‬ 1/ The National Bank may revoke the license of a የፋይ ‫ וּהـ‬የ‫ ףם‬ፈEድ ‫ג‬ከ micro-financing institution where: ‫ו ִُـ‬ክ ያِ٤ ֳ‫נרא‬ዝ ይ٤ֶָ፡- a) it is confirmed that the license was issued x/ ֳ‫ בּהـ‬ፈEድ የ‫רـ‬ጠው ‫ـ‬uu‫ـ‬ on the basis of false information; or ወይ‫ ו‬x‫נא ُר‬ጃ ֶይ ‫ِץאـ‬ ‫ֲא‬k ‫נת‬ጋገጥ፣ ወይ‫ו‬ b) the institution has failed to commence operations within 12 months following the ֳ/ ‫ בּהـ‬ፈEድ ‫רـ‬ጠው 02 ወ‫ُף‬ grant of the license. ውጥ ‫ ףם‬uይጀ‫ ץו‬የ‫ נׂש‬እ ደֲ፡፡ 2/ The decision to revoke the license of a micro- 2/ #‫ף׀‬ዊ ‫ ֹו‬ክ የ‫ْ ד‬ው ‫ ـ ו‬የፋ financing institution shall be published by the ይ ‫ וּהـ‬ፈEድ እ ዲ‫נר‬ዝ ‫ת‬ወ National Bank in a newspaper widely የ‫ בּהـ‬ዋ ‫עםא‬ያ dُ ‫ג‬ገ®ُ ካ circulating at the place where the head office ‫ר ּתֹו‬ፊው ‫ףרג‬ጭ ጋዜጣ ውuው of the micro-financing institution is situated. uُ‫ ז‬ያወጣָ፡፡ 3/ Revocation of license of a micro-financing 3/ ፈEድ የ‫נרא‬ዝ ውu ጋዜጣ ٍُ‫ ז‬ከወ institution shall become effective on the date ጣُ ‫ ׂש‬ወይ‫ ו‬#‫ף׀‬ዊ ‫ ֹו‬ክ ከ‫ג‬ወ of its publication or on any other date as the ው ‫ْ ד‬ው‫ ׂש ֶַ ו‬ጀ‫ـ צו‬ፈጻ‫ג‬ National Bank may specify. ይֲ ָ፡፡ 4/ Any micro-financing institution shall be 4/ ፈEዱ የ‫נרـ‬ዘُ ‫ ـ‬የፋይ prohibited from engaging in any micro- ‫ וּהـ‬የፈEድ ‫נ‬ዛው ውu ‫ـ‬ፈጻ‫ ג‬ከֲ financing business starting from the effective ُ ‫ ׂש‬ጀ‫ْ ד צו‬ው ‫ ו‬ዓይُ date of the revocation of its license. ‫ ـ‬የፋይ ‫ ُףםא ףם‬ይ٤ ָ‫ו‬፡፡ 5/ Any person aggrieved by the decision of the National Bank to revoke the license of a 5/ #‫ף׀‬ዊ ‫ ֹו‬ክ ፈEድ ֳ‫נרא‬ዝ ዚֱ micro-financing institution in accordance with ‫ׂש‬ጽ ዑ ‫ׂש‬ጽ /1/ ‫ר ُנטא‬ጠው sub-article (1) of this Article may petition to ውu 7‫ ץ‬የ‫ ד {רـ‬ው‫ר ו‬ው የፈEድ the Federal High Court within 30 days from ‫נ‬ዛው ውu ‫ـ‬ፈጻ‫ ג‬ከֲُ ‫ ׂש‬ጀ‫צו‬ the effective date of the revocation. " ‫ ُ ׂש‬ውጥ ֳፌዴ‫ ָף‬ከፍ‫ـ‬ ፍ‫ץ‬ድ dُ ֵያ‫ֳא‬ክُ ይ٤ֶָ፡፡ PART THREE B* C OPERATIONAL AND FINANCIAL AD EF G? REQUIREMENTS AND LIMITATIONS 9. አነስተኛ የፋይናንስ ሥራ ስለመጀመር 9. Commencement of Operation A micro-financing institution to which a license is ፈቃድ የተሰጠው አነስተኛ የፋይናንስ ተቋም፤ granted shall; 1/ ብሔራዊ ባንክ ባወጣው መመሪያ መሠረት ሥራ 1/ before commencing operation, fulfill requirements ከመጀመሩ በፊት ማሟላት የሚገባውን ሁኔታዎች prescribed by directives issued by the National Bank, ማሟላት፣ እና and 2/ commence its operation within 12 months from 2/ 9#J ! 7 K L MN 02 the date of issuance of the license. - O" K/ A& PP gA 4¹þ7)0 ØÁ‰L U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4710

0 — ABQR8 ST G ABQR T 10. Acquisition of Shares and Maintaining Shares

0. ABQR8 ST G ABQR T 10. Acquisition of Shares and Maintaining Shares &ST Register 1/ A ) M&ABQR O A 1/ The National Bank may issue directives on the &+8(O ABQR amount of shares that may be held by a person U6 M B VS WS-X in a micro-financing institution. :PP 2/ YO A U 2/ Every micro-financing institution shall maintain 6 M B +-O D( M&ABQ a register, in such form as the National Bank R8 TT ) Z may approve, which shall show the list of FYO +S[ ABQR T shareholders with voting rights. Any transfer of \PP ]^ T _ shares, which is recorded in the register, shall O ABQR TOO ^ O1 have legal effect. 8(`PP 3/ ]^ A 7a U A 7a /2/ &! 3/ The register required to be maintained under O T A c sub-article (1) of this Article shall be kept open G d 4T S&B*S for inspection by members of the public, without charge, at the micro-financing institution’s + eF c ` principal place of business during the micro- VS f 7XPP financing institution’s normal working hours.

01 — A A ?F & 11. Persons Assuming Management Positions of

01. A A ?F & 11. Persons Assuming Management Positions of +g Micro-financing Institutions 1/ YO A hi 1/ The directors and the chief executive officer of a BL ?) AM: ` A9j+ micro-financing institution shall meet the U6 M B M-XO VS -< qualification of competency prescribed by the F _ 9k SlN 3< National Bank and their appointment shall be mFYO U6 M B nG7 3 approved by the National Bank. A& PP 2/ A ) O A O" 2/ The National Bank may determine by directives ?) AM o\ & dF the maximum number of years a person may E G+ E G +(" serve on the board of a micro-financiing eF U6 M B VS W- institution and the conditions for his re-election. :PP 3/ : YO 4 ) 5p E G 3/ Without prejudice to the provisions of any other q 3O/ YO A hiB/ ` A9j+/ !* law, any person who is a director, chief r:s - 7"F 3 _ executive officer, senior officer or is otherwise ``V I RuS O" A directly or indirectly concerned in the V +[* O= management of a micro-financing institution in Ethiopia, shall cease to exercise such function if: v/ I RuS O" 3 Ow v B O[e !3/ - a) declared bankrupt, whether in Ethiopia or elsewhere; or &/ I RuS O" 3 !I RuS Ow E xG - y b) convicted of an offence involving - K 9(G !3= dishonesty or fraud, whether in Ethiopia z !A A or elsewhere. & A& PP gA 4¹þ7)01 ØÁ‰L U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4711 4/ U6 M B A 4/ The National Bank may issue directive on duties, hiBL ?) M / r:s / responsibilities and good corporate governance EF { |M S of the boards of directors of micro-financing A +&! VS WS-X institutions. :PP

12 — Appointment of External Auditors

12. Appointment of External Auditors 02. Oy O &~ 1/ YO A 1/ Every micro-financing institution shall appoint U6 M B 7M S&O Oy an external auditor satisfactory to the National Bank. Where it is without an external auditor it O ~ A& PP Oy O shall forthwith notify such fact to the National &O !3 ^ < -SO< &U Bank. 6 M B [-$ A& PP 2/ YO A ]^ 2/ If a micro-financing institution fails to appoint A 7a U A 7a /1/ D( Oy O an external auditor in accordance with the sub S~ E G3 E!+7"&O c article (1) of this Articlle, the National Bank dF6 M&ABQR8 $:: M )( may appoint an auditor who shall serve until the +S& Oy O U6 M B ~ next annual general meeting of shareholders of &FPP &~O O +G(O A the institution. The remuneration of such auditor B*S c 9 PP shall be paid by the institution. 3/ YO A 3/ The National Bank may issue directives, from O & {) +~c Oy time to time, on; OL= v/ l: &+MYO T$ a) the mimimum qualification required of external auditors appointed to perform F _ 9 / audits of micro-financiing institutions; &/ _ "7 / E b) the scope and depth of the audit; and c) tenure of auditors. / OL m _ / &! U6 M B ;O V S WS-X :PP 4/ Any of the following persons may not be qualified for appointment as an external auditor 4/ +!N YO A Oy O 3O ~ of a micro-financing institution: AN = a) a shareholder, director, chief executive v/ A c M&ABQ officer or employee of the institution; R / hiB/ ` A9j+ - D= b) a person who is a spouse or related by consanguinity or affinity to the first degree &/ ]^ U A 7a sG /v/ to a person referred to in paragraph (a) of &! O h G - A G this sub-article; or G( 5 - 5 _)= c) a firm of auditors of which any of its / ]^ U A 7a sG /v/ partners or employees falls within the - /&/ &! O D categories of persons described under - VB 3 O PP paragraph (a) or (b) of this sub- article. gA 4¹þ7)02 ØÁ‰L U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4712 03. Oy O ML Vk 13. Duties and Reports of External Auditors 1/ The duty of an external auditor of a micro- 1/ A Oy O financing institution shall be to report his audit M 7M M:YO O G( D findings and conclusions, carried out on the ( c [ L SYO O1 basis of accepted auditing standards, to the k G(MYO ) h & c M& shareholders of the institution and the National ABQR8 E &U6 M B V $ Bank. The external auditor shall also be ( OPP V Oy O T T k &U6 M B 7"F :B required to submit the management letter to the A& PP National Bank. 2/ U6 M B 7(O O V {: )5+ E {) 2/ The National Bank may, if not satisfied with the _T - : Oy O ~ audit report, commission a second audit or E G E ( )( :PP require the prompt appointment of a new auditor U6 M B A &~O Oy O who shall make an independent report and +G(O B*S A whose remuneration shall be paid by the micro- c +9 3 PP financing institution. 3/ O A 3/ Where the external auditor of any micro- Oy O M' financing institution, in the course of the +S{) ;= performance of his audit duties, finds out that: v/ ]^ A` - AM a) there has been a serious breach of, or non- S:YO 42 ) 5p - compliance with, the provisions of this ]^ A` D( - G ? Proclamation, other relevant laws or - VS !* G( regulations or directives issued hereunder; X[YO - S&!Y O / &/ A c - b) a criminal offence involving fraud or other YO c hiB dishonesty has been committed by the - D y - micro-financing institution or any of is : E xG - K 9 directors or employees; c / / A c {F !5 c) losses have been incurred which reduce the k - !]S : 3 total capital of the micro-financing +7 G( 3< = institution by 25% or more; / A7 - _ S "$ AG5 : +" d) serious irregularities have occurred which may jeopardize the secutiry of its depositors !GO - !&GO AD or creditors;or Oy !M) 3 AD !. / - e) it is not possible to confirm that the claims D/ _ A7 - _ of depositors and creditors of the micro- S _ "S financing institution are capable of being c (k W9< :YO met out of the assets of the micro-financing (5" A& N / institution; QG xh &U6 M B &+ he shall immediately report the matter to the &!FYO A{: -SO< [ National Bank and other concerned bodies. -$ A& PP gA 4¹þ7)03 ØÁ‰L U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4713 4/ YO A Oy 4/ A person appointed as an external auditor of a O 38 ~ O G micro-financing institution shall not operate an G &: & O O !+O account with, or be granted any type of facility A M& eF {3 7/ from, that institution except in the normal course ]SO ST - ! c O d A of business and at an arms’s length basis. A PP 5/ The National Bank shall determine by directives 5/ U6 M B YO A the time limit for issuance of audit reports after d ! 77 the end of a micro-financing institution’s : S^ ; O V financial year. OX E h& VS - PP 04. EF 14. Financial Requirements 1/ A W8(O + 1/ The minimum paid up capital required to be MO T$ !9& {F U maintained by a micro-financing institution shall 6 M B +S-XO VS - be determined by directives to be issued by the PP National Bank. 2/ U6 M B +!N +&! 2/ The National Bank may issue directives VS WS-X :P- governing: a) limits on the maximum credit to be v/ A & extended by a micro-financing institution to O & - ) W" any individual or group and provisioning &+&O !* ) for problem loans; :&MYO )L &+_O MS = b) capital adequacy and liquidity levels to be &/ : S& A maintained by a micro-financing institution W8(O &+MO {F in operation; _-A! vk= / A ) A c) the maximum number of years after 9#) ! ; K L o_ licensing within which a micro-financing institution shall be profitable and related dF O" A s matters; 3 E h& !] 5 & SSg xhR= d) financial performance standards of a micro- / &A financing institution; and A9jn G(= E D/ &A e) keeping of books of accounts, management ASST/ A ( information system, internal control system * / O" q"" ;O and periodic reporting of a micro-financing $( :&MYO VkPP institution. 3/ U6 M B A 3/ The National Bank may prescribe a different &AG5 5& eF O" capital and liquidity requirements to be M &S {F _-A! maintained by different micro-financing (k EF &&S A institutions depending on their risk profile. WS7 " :PP gA 4¹þ7)04 ØÁ‰L U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4714 05. & T? ( & 15. Financial Records and Disclosure of Information 1/ Any micro-financiing institution shall: 1/ YO A P- a) prepare its financial statements in v/ &, 7M accordance with acceptable accounting standards; M:YO V A_K G( D( _5K ፣ b) keep such records as are necessary to &/ c eF a BB + exhibit clearly and correctly the state of its S[/ c _ A affairs and to explain its transactions and c +S(h E c ]^ A` financial position and to enable the National ) 5p E U6 M B M- Bank to determine whether the micro- XYO VS D( O financing institution had complied with the ES{G &3< U6 M B provisions of this Proclamation and (5" + eF T? ST፤ E directives issued by the National Bank; and c) register and keep documents for each type / U6 M B +S-XO VS of transaction in accordance with directives ES h J E $# d of the National Bank. +_ & T ST/ A& PP 2/ Any micro-financing institution shall: 2/ YO A P- v/ U6 M B +-O ; a) within a time period to be determined by G O" +M 9(c the National Bank, submit to the National &, U Bank duly signed financial statements and 6 M B +-< Vk &M other reports as prescribed by it; and | $(/ E b) exhibit at all branches, in a conspicuous &/ Oy O (( place throughout the year, a copy of the last +\ * &, audited balance sheet and profit and loss N c $ , statement. Z 3 ?F d. cN E F )(/ A& PP 3/ Any micro-financing institution shall, where it 3/ YO A P- appears likely that: v/ & _ A7 & Ah a) it cannot meet its obligations to its V S& EF l: E G depositors or other creditors; or / - &/ & _ A7 & Ah b) it may have to suspend payments to V B*S -$. &9n depositors or other creditors; E G+[O/ forthwith notify the National Bank of the full Q cNO BB&O eF facts of the situation and also provide such other &U6 M B [-$ A& = V information as the National Bank may request. U6 M B +#YO $( A& gA 4¹þ7)05 ØÁ‰L U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4715 4/ U6 M B AM A:YO +S 4/ The National Bank may collect any information from MYO ( !A a micro-financing institution, as it may deem $ :፣ 38 / appropriate; provided, however, that such information may not be disclosed to any person unless the disclosure: v/ ]^ A` ) 5p & 9 a) is made for the purpose of fulfilling the QM/ requirements of this Proclamation; b) is required to ensure the financial soundness &/ c 1 of the institution; & (5"/ c) is made to recipients who are legally / 4 &97G:YO / authorized to obtain such information; d) is made to the body to which the National / U6 M | V &3& Bank is accountable; A{/ D/ *) f F_g/ - e) is ordered by a court; or f) is required for the purpose of meeting (/ I RuS MMYO d& A7* obligations which Ethiopia entered into EF &-X QM/ {3 under international agreement. 7 E]^ ( & O O :9O A PP

16 — Extending of Loans

16. Extending of Loans 06. ) A AX" An authorized institution may extend loans to groups 9#) O &)8 3 and to individuals. Loans may be made without &&? ) :PP c collateral, secured by collateral or secured by group E G AM. z O[e S&S/ or individual guarantees as appropriate and at the S/ ( - ) - discretion of the institution. & ` ) :PP

07 — B!: 17. Prohibitions

07. B!: 17. Prohibitions Without the prior written approval of the National !U6 M B a* 9#) {: 7 YO A +!N Bank, no micro-financing institution shall: 9 A = 1/ enter into an agreement for the amalgamation 1/ c - c !: or disposal of its business; & 7:7 - &" O O ``= 2/ transfer or otherwise dispose of the whole or 2/ G A9jn M' {3 any part of its property other than in the 7 (. cN 3 !s &: ordinary course of business; O :&* - : ) \-= 3/ effect reduction of its capital, other than as a 3/ B S {3 7 result of losses; c {F 7= 4/ ( a E hGVS 4/ amend its memorandum and articles of association or alter the name under which it is G - 9#) S licensed; &-"= gA 4¹þ7)06 ØÁ‰L U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4716 5/ !97G& A{Mo Oy PP 5/ operate outside the area for which it has been issued with a license. 08. A : &+G( q"" {!S E 18. Inspection of Micro-Financing Institution and Corrective Measures 1/ U6 M B ;O - Y 1/ The National Bank may, periodically or at any O ; S&$)+S 7S time, without prior notice, make, or cause to be YO A : made, an on-site inspection on any micro- ?FO k q"" {) - financing institution carrying on micro-finance E {) )( :PP business in Ethiopia. 2/ !$::O _ A7 q" A ) 2/ Where an application, accompanied with A( - A c supporting evidence, is made to the National _ ) {&O $:: _ O" A ) ) Bank by one-tenth of the total number of A7 y 3< A{¡ c depositors or by any number of depositors : {) A9:; 3< + holding not less than one-sixth of the deposits S(h ( AS_O "S {7(/ U of a micro-financing institution, the National 6 M B ! 7( 1 Bank shall examine, or cause to be examined, eF . ]^ A` ) 5 under conditions of secrecy, the affairs of the p E ]^ A` D( - micro-financing institution in order to G ? VS c E $ determine whether it is in a sound condition # G O" !YO and the provisions of this Proclamation and & (5" +" {) regulations and directives issued hereunder - E {) & )( :PP have been compled with. 3/ A ¢X' 3/ Inspection of micro-financing institutions may M U6 M B A ) M&cS be carried out by one or more officers of the - !A ) : 3< M&cS National Bank or by trustworthy and qualified - E +XMYO persons or firms employed by the National &]^ xh U6 M B 7' Bank for this purpose. M&cS - )k W{) :PP 4/ A E ¢X' 4/ Persons charged by the National Bank with U6 M B X XYO inspection of a micro-financing institution shall - )k q"" !+G( be authorized to request from the personnel of A D£ the micro-financing institution such q""' M O1F 3 ) information or explanation of the records or & {) A9:; 3< ( & transactions of the micro-financing institution c eF +¤ \ that are necessay for the effective carrying out E $# VS &$ X of the inspection. A:YOPP 5/ q"" V &+&!O 5/ The inspection report shall be communicated V A E G to the examined micro-financing institution O G(5PP 7(O V : and, before the report is made final, it shall be ( O[e !. s given an opportunity to express its views on the VO V. : AS. report. E S7 E) `PP 6/ &U6 M B 7(O q"" 6/ The content of the inspection report submitted to the National Bank shall be considered as V _ P- confidential by: gA 4¹þ7)07 ØÁ‰L U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4717 v/ q""' M{J E a) the persons carrying out the inspection, and q""' G( A the directors and employees of the hiBL inspected micro-financing institutions; and D£/ A &/ ]^ A` ) 5p & b) the National Bank, unless it is for the 9 - 4T "$ & purpose of fulfilling the requirements of ! QM {3 7 U this Proclamation or to the interest of the 6 M B/ ¥ $ public; A& PP 7/ G(O q"" VO A 7/ Where an inspection of a micro-financing I RuS n O +¦ institution results in a finding that the institution 42/ G ? - VS S! has failed to comply with applicable laws and & 3< - A directives or with the terms and conditions of E D O 9#) &! license or has engaged in practices detrimental . EF S9n 3< (5 to the interests of depositors or has serious E G3 - YO A§ _ weaknesses in its corporate governance, the A7 - 4T "$ +2h National Bank may: YO M : E G3 - A' : !M) )B ! E G3 U6 M BP- a) require the inspected micro-financing v/ A c Y institution to call a meeting of its O M &! &5 shareholders or board of directors for the M&ABQR8 - iBL purpose of considering any matter ?) M E - ]^ arising out of, or relating to, the r:s O inspection or require the officers of such &! U6 M B r:s micro- financing institution to discuss E S5' & _T/ any such matter with the officers of the National Bank; &/ A ) - !]S : r:s b) depute one or more of its officers to VO A watch the proceedings at any meeting of iBL ?) the board of directors of the inspected - Ez Y micro-financing institution or of any O %+¨ - : A{ committee or of any other body M : E ¦ &-! - constituted by it and require the {R AS 7z inspected micro-financing institution to M : E & _T= give an opportunity to the officers so deputed to be heard at such meetings; / A c W-) c) instruct in writing corrective actions to +MO {!S E be taken by the inspected micro- E -h a* & _T/ financing institution; d) impose a fine, as prescribed by its / +S-XO VS D( A directives, on the inspected micro- c A ) financing institution’s one or more - !]S : 3< hiB directors, the chief executive officer and L/ ` A9©+ E other senior officers, or order their !* r:s suspension or dismissal from duty; : _ 7, &- - ! E FJ - E . & _T/ gA 4¹þ7)08 ØÁ‰L U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4718 D/ A c A e) prohibit the micro-financing institution $ , E h!* &! from opening new branches; !/ (/ c ABQR * ) f) restrict, suspend or prohibit payment of B** &G/ & _ dividends; - &!!/ g) direct the inspected micro-financing / A c &- institution to temporarily suspend any ; !s 3 cN A one or all of its micro-financing E h business; or & _T/ - / A c 9#) h) revoke the license of the micro-financing &(T c *( institution and initiate the process of its G E K & )(/ liquidation. :PP

19 — Receivership and Liquidation

09. &ª] AhG *( 1/ U6 M B !+!N A J - !]S : 3< eF A ) A 8YO QS c (B? +¢X ª] W~ - z E Gª] 38 WS& :P- v/ ]^ A` A 7a 8 U A 7a 1/v/ D( M | *#) (_ !3= &/ A c v &A7 !MYO EF S !3= / 4 - - B S 7:N v o B ! !3= / A c O +S{GO 1 M3 E " D/ U6 M B X& O G 3 X !3= (/ c T? / / i% - - &q"" O U6 M B D - - S:7( !3= gA 4¹þ7)09 ØÁ‰L / A c G G EF - _ A7 "S : A + { !8(= / A c {F N cN - {FN A \O B* +S G( - E G+G + !3= 7/ A c A Ow ! = / !U6 M B $)+S a* 9#) [S ! YO : A - M B 5 7:7& !3= / A c= /1/ U6 M B +7O A {F Sl : -Gs {FN +S 9O E G 8(O + / /2/ U6 M B QF_T {FN +S9O S & - +-O FN « & M (/ - /3/ &U6 M B 7? 7M S {F « M E$) M6 )( S &/ !3= Y/ M&ABQR8 !U6 M B $) +S 9#) c & *( -< E G3 - c E G A ) z + 7[7 456 O 38 7 [O !3= ¬/ M&ABQR8 c ª] E O 7 M B G7 !3PP gA 4¹þ7)@ ØÁ‰L 2/ U6 M B ]^ A 7a U A 7a /1/ D( &~ ª] 9&O B*S - PP 3/ A ª] AhG *( G AM M:YO M B A` ) 5p D( ! - NPP B* A ) 5p !. 9#) XYO A & F-$ U6 M B dF6 V. O" 9#) XYO A TT A ª S-XPP E ] TT : ' (g A s y M:YO 5 : -SO< A[ ª S-XPP !1.. A -G M B - -G : &+5 eF 1/ YO A U6 M B S-XYO 9k Alk "S S7( E G3/ M B - : 38 AM M&O 4 D( U6 M B E G 9#) WO :PP 2/ YO A ]^ A 7a U A 7a /1/ D( E G 9#) !O/ U6 M B c A E G A ) _* A)® E 7" WS_O :PP !2.. )5* & A & G - {F:YO & M !v O" - !Oy EhF WS¦ :NPP gA 4¹þ7)@1 ØÁ‰L !3.. ! * o j &3 O A SO *= 1/ &M&ABR8 O ) !*:= 2/ cN & o j 3 PP 19. Receivership and Liquidation 1/ The National Bank may appoint a receiver or itself act as a receiver if it determines that one or more of the following circumstances exist in respect of a micro-financing institution: a) the license of the micro-financing institution is revoked as stipulated under sub-article 1(a) of Article 8 of this Proclamation; b) the micro-financing institution’s assets are & _ S less than its obligations towards its depositors and creditors; c) substantial dissipation of assets or earnings VS :&* due to a violation of any statute or " # 2G&O A directive or unsafe and unsound practice; d) the micro-financing institution is in an unsafe and unsound condition to transact business; # 2G&O eF !3= e) the micro-financing institution willfully violated any limitations imposed by the National Bank; f) concealment or refusal to submit the micro- (k G7 financing institution’s books, papers, M X & records or assets for inspection to any inspector or to any lawful agent of the National Bank; U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4719 g) there is a strong likelihood that the micro- financing institution may be unable to pay l its obligations or meet its depositors’ demands in the normal course of business; h) the micro-financing institution has incurred, or is likely to incur, losses that will deplete all or substantial part of its capital; [ i) the institution has engaged in activities other than micro-financing business; j) the institution has merged with another micro-financing institution or a bank without the prior written authorization of the National Bank; k) the micro-financing institution: (1) is undercapitalized and has no reasonable prospect of becoming adequately capitailized; & A$ (2) fails to become adequately capitalized when required to do so by the National Bank, or fails to submit a U6 M B capital restoration plan acceptable to ; G O" { the National Bank within the time +S prescribed by the National Bank; or 7M S&O E$) S:7 (3) materially fails to implement a capital restoration plan submitted and accepted by the National Bank; l) shareholders of the institution have decided, subject to approval of the National Bank, to dissolve the institution or the institution has ceased to exist as legally or operationally independent entity; m) the micro-financing institution, by :&9 O[e resolution of its shareholders, and subject to AhG approval of the National Bank, has U6 requested to be put under receivership. U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4720 2/ The National Bank shall determine the fee to be +! paid to a receiver appointed pursuant to sub- article (1) of this Article. 3/ The receivership and liquidation of a micro- financing institution shall proceed in accordance with the relevant provisions of the Banking Business Proclamation. PART FOUR MISCELLANEOUS PROVISIONS 20. Publication The National Bank shall, in its annual report, publish the list of licensed micro-financing institutions. It shall also publish in newspapers of wide circulation any additions to or cancellation - !TT' from the said list. 21. Transformation of a Micro-Financing Institution to a Bank or other Financial Institution 1/ The National Bank may, upon request, re- license a micro-financing institution that meets the criteria set by the National Bank to E operate, in accordance with the relevant law, as a bank or another type of financial institution. 2/ Where a micro-financing institution is re- licensed in accordance with sub-article (1) of this Article, the National Bank may require it to continue providing micro-financing services as part of its operations. 22. Assistance Micro-financing institutions may obtain grant from local or foreign sources for the purpose of on- lending or capitalization. U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4721 23. Exemption from Profit Tax Any micro-financing institution that makes profit !O from its business and; 1/ distributes to shareholders shall pay profit tax as any business entity, !A!9& E G * o 2/ fully ploughs back shall not pay profit tas. c {`&O ! *

24 — Know-Your-Customer Standards

24. Know-Your-Customer Standards !4 G £ & -$ The National Bank may issue directive prescribing A G £ YO standards on micro-financing institutions’ due 5 !F &O +SOqMYO diligence in knowing their customers and reporting AXV [ E $# V of suspicious transactions. +SGxMYO 9k 6 M B VS W- :PP

25 — Prohibitions

25. Prohibitions ! 5. B ! : O Oy v 5 - cN cN Any foreign national or organization fully or 3 !s Oy v 2 M&f S_ partially owned by foreign nationals may not be ) A & - allowed to establish a micro-financing institution, $ ,* &B9 - Oy v A open branches or subsidiaries of a foreign micro- 7a: 3 I RuS O" financing institution in Ethiopia or to acquire the & - I RuS O" shares of an Ethiopian micro-financing institution. A ABQR M&f &3 A97)& PP

25 — Penalties

25. Penalties ! 6. $ X 1/ O A 1/ Any director, officer or employee of a micro- hiB/ r:s - D/ financing institution who; v/ O O ]^ A` ) 5 a) obstructs the proper performance by an p D( XN EF 9 E h - auditor of his duties in accordance with U6 M B X O ¢ the provisions of this Proclamation or XXV A c inspection of a micro-financing institution : oO q"" E hS{) by an inspector duly authorized by the E $ !3/ - National Bank; or &/ & F& - A[[ &, - b) with intent to deceive, makes any false or A c T/ misleading statement or entry, or omits / V - &, any statement or entry that should be O" T E G3 - made in any book, account, report or T ( &, - statement of micro-financing institution; ( [_ 7( E G3/ shall be punished with a fine from Birr 500,000 ! $A E! 1)A +G 7, to Birr 100,000 and with rigorous E !0 E! 05 d +G a< E 7XPP imprisonment from 10 to 15 years. gA 4¹þ7)@2 ØÁ‰L U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4722 2/ ]^ A 7a U A 7a /1/ ) 5p 2/ Without prejudice to sub-article (1) of this E G7 38 O O ] Article, any person who contravenes or ^ A` ) 5p - ^ obstructs the provisions of this Proclamation or A` & 9 - G ? regulations or directives issued to implement - VS :&9 - this Proclamation shall be punished with a fine A9j YO S !& E G3 E! up to Birr 10,000 and with an imprisonment up 0A +G 7, E! C to three years. d +G E 7XPP

27 — Issuance of Regulations and Directives

27. Issuance of Regulations and Directives !7 G VS OX X 1/ The Council of Ministers may issue 1/ +¯ L B f ^ A` regulations necessary for the implementation & 9n +S9x G ? of this Proclamation. WS-X :PP 2/ The National Bank may issue directives 2/ U6 M B ^ A` ]^ necessary for the implementation of this A 7a U A 7a /1/ D( Proclamation and the regulations issued in - G ? & 9 +S9 accordance with sub-article (1) of this Article. x VS & OX :PP

28 — Applicability of other Laws

28. Applicability of other Laws !8. 9j+ &+8YO 42 1/ Banking business laws shall, mutatis mutandis, 1/ M B 42 ]^ A` S be applicable to micro financing business with 9< xhR +&! A respect to matters not covered by this : E GAM Proclamation. 9j+ 3 NPP 2/ Property Mortgaged or Pledged with Banks 2/ M B S &S_ ( - Proclamation No. 97/1998 and Business XO A` q" (7/09)( E & Mortgage Proclamation No. 98/1998 shall, ) ` S -XO mutatis mutandis, be applicable with respect to A` q" (8/09)( A property mortgaged or pledged with micro- S S_ ( financing institutions. : E GAM 9j+ 3 NPP ! 9. ' 9©+ & 8YO 42 29. Repealed and Inapplicable Laws 1/ &A ) A$o _ ) 1/ The Licensing and Supervision of the Business k 9#) & YO of Micro-financing Institutions Proclamation &¢X -XO A` q" No. 40/1996 is hereby repealed. #/09)'8 ]^ A` °±PP 2/ !]^ A` 5 +#( YO 2/ No law, regulations, directives or practice may, 4/ G / VS - AD in so far as it is inconsistent with the ) ]^ A` Gx xhR provisions of this Proclamation, be applicable with respect to maters provided for by this : 9©+ A3 PP Proclamation. gA 4¹þ7)@3 ØÁ‰L U¶T Uz¤È qÜ_R "3 ? 4 qqN 2A1 ›.M Federal Negarit Gazeta No. 33 12th May, 2009 …. page 4723 ". ዋጁ የ‫ג‬ፀ ُ ጊዜ 30. Effective Date ይֱ ዋጅ ፌዴ‫ ָף‬ጋ‫ ُע‬ጋዜጣ ٍُ‫ז‬ This Proclamation shall enter into force up on the ከወጣُ ‫ ׂש‬ጀ‫ צו‬የፀ ይֲ ָ፡፡ date of publication in the Federal Negarit Gazeta. ዲ ‫ ֹו‬ግ jُ 4 ‫ׂש‬ 21 ዓ.‫ו‬ Done at Addis Ababa, this 12th day of May , 2009 GR¥ wLdgþ×RgþS GIRMA WOLDEGIORGIS yxþT×eÃ ØÁ‰§êE ÄþäK‰sþÃêE ¶pBlþK PÊzþÄNT PRESIDENT OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA