National Bank of Ethiopia NBE Neglects Interest Free Banks

A new directive issued by the National Bank of Ethiopia (NBE) seems to have neglected interest free banks.

This week NBE announced that banks can borrow from each other. The guide on this issue by the National Bank describes the main aspects of the loan, such as repayment dates, interest rates, requirements for borrowers and other issues, but does not specify how banks that offer interest-free services will participate and integrate with the guide.

Interest free banks doubt the possibility of their participation in the use of this borrowing service allowed by NBE.

Elias Adam, director of interest-free banking directorate at the Development Bank of Ethiopia, this week said, “The current directive excludes Ethiopia’s interest-free banks, which limits their participation in this important financial market.” He urged the National Bank of Ethiopia to issue guidelines for interest-free banks to fully participate in mutual lending services.

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