Opening, Relocation and Closure of Branch Office of Capital Goods Finance Companies Directive No. CGFB/14/2022

NATIONAL BANK OF ETHIOPIA h*it\n / ADDI S ABABA FIS/MFISD/531/2022 November 25, 2022 All Capital Goods Finance Companies Ethiopia Subject: Directive No. CGFB/14/2022 Enclosed herewith, please find "Opening, Relocation and Closure of Branch Office of Capital Goods Finance Companies^Dir^ective No. CGFB/14/2022" for your information and strict implementation. *.._, o-£ x>. Sincerely yours, - ' - i X ' ~ ' '-. ".

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  " MergaAVakweya
  Director, Micro finance Institutions Supervision Directorate
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  CC:

H.E. The Governor
Vice Governors
Senior Advisor
Advisors
All Directorates
National Bank of Ethiopia
'r Association of Ethiopian Capital Goods Finance Companies Addis Ababa T,.. r."/.. 555Q/2048I <5-*'f: +251-11-551-4588 I ^Ah *TC= +251-11-551-74301 Websiteiittps://nbe.gov.et Address: Sudan Street P.O.Box Fax No.: Tel. No.: SWIFTCODE-NBETETAA

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NATIONAL BANK OF ETHIOPIA hnn / ADDIS ABABA
LICENSING AND SUPERVISION OF Capital Goods Financing Business Opening, Relocation and Closure of Branch Offices of Capital Goods Finance Companies Directive No. CGFB/1 4/2022 Whereas, capital goods finance companies' branch office opening, relocation, and closure activities necessitate sound and prudent practices to ensure the safety and soundness of the companies; Now, therefore, pursuant to the power vested in it under sub-article 4(4(a)) and 18 (4) of Capital Goods Leasing Business Proclamation No. 103/1998 as Amended by Proclamation No. 807/2013, the National Bank of Ethiopia has issued this Directive.

1. Short Title
   This Directive may be cited as "Opening, Relocation and Closure of Branch Offices of Capital Goods Finance Companies Directive No. CGFB/14/2022."

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2. Definitions
   For the purpose of this Directive, unless the context requires otherwise:
   2.1. "branch" means a place of business or an office where the capital goods finance
   company carry on all or parts of its principal businesses as prescribed in Capital Goods Leasing Business (Amendment) Proclamation No. 807/2013;
   2.2. "existing branches" means branches of capital goods finance companies that are in
   operation before the effective date of this Directive;
   2.3. "capital goods finance company" means a company licensed by the National Bank to
   undertake capital goods finance business;
   2.4. "National Bank" means the National Bank of Ethiopia;
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3. Scope of Application
   The provisions of this Directive shall be applicable to all capital goods finance companies operating in Ethiopia.
4. Branch Opening
   4.1. A capital goods finance company, prior to opening a new branch office and commencing
   operation, shall ensure that:
   4.1.1. feasibility study has been conducted to open the branch;
   4.1.2. adequate trainings are provided to assigned staffs on policies and procedures of
   the company, relevant National Bank Directives and AML/CFT requirements;
   4.1.3. all relevant policy and procedure manuals, directives of National Bank and laws
   related to AML/CFT are distributed to appropriate staff members of the branch;
   4.1.4. the branch is guarded at all time;
   4.1.5. branch is clean and suitable for business having lighting and circulation of air;
   4.1.6. cash safe vault has been installed in the branch;
   4.1.7. an outdoor advertising board displaying the name of the institution, the name of
   the branch and its office working hours is in place; and
   4.1.8. a copy of the company's business license and branch license is displayed in a
   visible area of the branch.
   4.2. A capital goods finance company that has opened a new branch office as set out under
   sub-article 4.1 of this Directive shall get a branch license from the National Bank within 30 working days after commencement of operation.
   4.3. In applying for a new branch license as set out under article 4.2 of this Directive, a
   capital goods finance company shall submit an application letter and a duly completed and signed notification form, as prescribed under Annex I of this Directive.
   4.4. A capital goods finance company that has relocated its branch office or changed the
   name of the branch shall apply to the National Bank within 30 working days after the

relocation or changing the name of the branch, and get a new branch license by duly completing and signing Annex I of this Directive.
5. Branch Closure
5.1. A capital goods finance company shall not close its branch office without getting written
approval from the National Bank.
5.2. A capital goods finance company that intends to close its branch office shall ensure that
the concerned customers of the office are notified prior to the closure of the office and the interests of the customers are protected.
5.3. To get the National Bank's approval for the closure of a branch office in line with sub￾article 5.2 above, the company shall:
5.3.1. submit application to the National Bank, at least 30 working days prior to the
proposed closing date by justifying the reason for the closure and by demonstrating the preparations made to close the office; and s
5.3.2. return to the National Bank the original branch license.
6. Transitional Provision
6.1. A capital goods finance company shall submit an application to the National Bank to get
license for its all existing branches, by duly completing Annex I of this Directive within 6 (six) months from the effective date of this Directive. *;

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7. Repealed
   Article 7 of Requirements for Licensing of Capital Goods Finance Business Directive No.
   CGFB/02/2013 is hereby repealed and replaced by this Directive.
8. Effective Date
   This Directive shall enter into force as of 23rd day of November 2022. Governor

Annex I
Notification Form to Open a New Branch or Relocate a Branch Office Name of the Capital Goods Finance Company:
Reporting Date:

1. Name of the Branch:
2. Address of the branch:
   Region:
   City:
   Sub-city:
   Woreda:
   Kebele:
   House No.
   Fax:
   Tele (Office):
   Tele (Mobile):..
   E-Mail:
3. Confirmation on the fulfilment of minimum standards:
   No.
   Minimum standard as per article 4.1 of the directive Conducting of feasibility study as per sub-article 4.1.1. Staff training as per sub-article 4. 1 .2 Distribution of required documents as per sub-article 4.1.3 Security guard of the branch as per sub-article 4.1 .4 Cleanness, lighting and clean air circulation of the branch as per sub-article 4.1 .5 Suitable safe vault as per sub-article 4.1.6 Displaying of required information to the public as per sub-article 4.1.7 Displaying of business license and branch license as per sub-article of 4.1.8 Is the standard fulfilled? Yes . No Reason for No response
4. Date of commencement of operation of the branch:
   I hereby confirm that the above statements are true and correct.
   Name:
   Designation:
   Signature:
   Date: