Ethiopian Banking Proclamation No. 1360/2025 represents one of the most significant legal upgrades in Ethiopia’s financial sector in years. It modernizes banking governance, strengthens financial stability, expands regulatory oversight, and opens the door for innovation and competitiveness.
This proclamation comes at a time when Ethiopia is reforming its financial market, preparing for capital market activation, encouraging digital finance, and gradually opening the sector to foreign investment.
This blog provides a comprehensive and human-centered analysis of the proclamation, breaking down its objectives, major reforms, impacts, opportunities, and SEO-friendly insights for banks, fintechs, investors, and policy researchers.
1. What Is the Purpose of Banking Proclamation No. 1360/2025?
The main goal of the new proclamation is to strengthen the safety, stability, and competitiveness of Ethiopia’s banking system.
At a high level, the Proclamation aims to:
- Modernize outdated legal provisions.
- Strengthen the supervisory power of the National Bank of Ethiopia (NBE).
- Improve corporate governance and reduce risks.
- Encourage digital banking and technological innovation.
- Align Ethiopia with international banking standards (Basel Core Principles).
- Prepare the sector for future foreign investment and capital market integration.
In short, it is a legal foundation for a modern, resilient, and inclusive banking system.
2. Key Provisions Introduced in The new Ethiopian Banking Proclamation No. 1360/2025
Below are the major pillars of the proclamation. These points reflect how the banking framework has expanded and modernized.
2.1. Stronger Licensing & Market Entry Requirements
The proclamation increases the level of scrutiny for establishing new banks. Key features include:
- Higher minimum capital requirements.
- Stricter fit-and-proper criteria for founders and major shareholders.
- Mandatory business feasibility studies aligned with NBE’s model.
- Clearer rules for foreign participation (if opened in the future).
This ensures only strong, credible institutions enter the sector.
2.2. Enhanced Regulation of Shareholding Structures
The proclamation introduces tighter control on:
- Maximum ownership percentages for individuals and companies.
- Transparency requirements during share transfers.
- Mandatory NBE approval for significant transactions.
This prevents harmful concentration of power and improves governance integrity.
2.3. Corporate Governance Reform on the new Ethiopian Banking Proclamation No. 1360/2025
One of the strongest parts of the proclamation is governance modernization. It outlines:
- Role, responsibility, and accountability of Boards of Directors.
- Competence requirements for CEOs, CFOs, CROs, and senior managers.
- Conflict-of-interest prevention rules.
- Board audit committees and risk management committees.
These measures push Ethiopian banks toward global governance standards.
2.4. Risk Management & Internal Control Frameworks on Ethiopian Banking Proclamation No. 1360/2025
The proclamation expands the legal requirement for risk management, including:
- Credit risk
- Liquidity risk
- Market risk
- Operational risk
- Cybersecurity and digital risk
- Anti-money laundering (AML) compliance
Banks must now build robust internal control systems supported by certified professionals.
2.5. Digital Banking, Fintech & Technology Modernization
A timely component of the proclamation supports digital transformation:
- Legal recognition of digital banking products.
- Guidelines for electronic transactions and authentication.
- Space for fintech collaboration under NBE oversight.
- Clear rules on outsourcing technology services.
- Cybersecurity obligations for all financial institutions.
This strengthens Ethiopia’s shift toward cashless services.
2.6. Strengthened Supervisory Powers for the NBE
The proclamation gives the National Bank of Ethiopia:
- Wider on-site and off-site supervision powers.
- Authority to issue compliance directives.
- Power to enforce corrective measures—fines, suspensions, leadership changes.
- Power to intervene early in failing banks.
- Power to enforce financial reporting and disclosure obligations.
This improves stability and prevents systemic risks.
2.7. Consumer Protection & Transparency on the new Ethiopian Banking Proclamation No. 1360/2025
To protect bank customers, the proclamation requires:
- Transparent disclosure of fees and charges.
- Clear communication of loan terms, interest rates, penalties.
- Responsible lending practices.
- Standard dispute-resolution procedures.
This builds trust and promotes financial inclusion.
2.8. Bank Resolution, Mergers & Acquisition Rules
For the first time in a robust manner, the proclamation outlines:
- Procedures for resolving distressed banks.
- Criteria for bank mergers and acquisitions (M&A).
- Steps for voluntary liquidation.
- Protection for depositors during restructuring.
This creates legal mechanisms to protect the financial system during crises.
3. Major Impacts of the New Ethiopian Banking Proclamation No. 1360/2025
3.1. Improved Financial Stability & Ethiopian Banking Proclamation No. 1360/2025
Stronger capital, risk management, and governance mean fewer crises and failures.
This increases investor confidence and economic predictability.
3.2. Faster Digital Transformation
By legally recognizing digital banking and fintech collaboration, the proclamation accelerates:
- Mobile wallets
- Digital loans
- Online payments
- API-based services
- Agent banking
This expands access to millions of unbanked citizens.
3.3. Attraction of Foreign Investment & Ethiopian Banking Proclamation No. 1360/2025
Modern legal frameworks make Ethiopia more attractive for:
- Foreign banks (when allowed)
- Global fintech companies
- Diaspora investors
- Development partners
It aligns with future partial liberalization.
3.4. Stronger Customer Confidence
With consumer protection and transparency rules, customers gain trust in:
- Loan contracts
- Deposit security
- Fair pricing
- Honest communication
This helps grow savings and credit markets.
3.5. Better Preparedness for Capital Markets Ethiopian Banking Proclamation No. 1360/2025
Ethiopia’s new Capital Market Authority and the upcoming stock exchange require strong banks.
The proclamation helps banks prepare for:
- Issuing bonds
- Listing shares
- Attracting international capital
- Meeting disclosure standards
4. Challenges Banks May Face Under the New Ethiopian Banking Proclamation No. 1360/2025.
While the reforms are beneficial, they bring challenges:
- Higher compliance costs for banks.
- Need for advanced technology and cybersecurity tools.
- Stricter reporting requirements to NBE.
- Pressure on underperforming banks to restructure or merge.
- Talent shortage in risk, digital finance, and governance roles.
Banks must adapt quickly to stay competitive.
5. Opportunities Created by the the new Ethiopian Banking Proclamation No. 1360/2025
Here are the biggest opportunities:
1. For Banks Opportunities Created by the new Ethiopian Banking Proclamation No. 1360/2025
- Innovation in digital products
- Improved credibility
- Access to international partnerships
2. Ethiopian Banking Proclamation No. 1360/2025 For Fintechs
- Space for legally recognized collaboration
- API and technology outsourcing allowed
3. For Investors
- Clearer regulatory environment
- Better financial reporting
4, For Customers Ethiopian Banking Proclamation No. 1360/2025
- Stronger protection
- More digital services
- Improved service quality
6. Conclusion: Why Why Proclamation No. 1360/2025 Matters
Ethiopian Banking Proclamation No. 1360/2025 is a transformational legal milestone.
It strengthens the country’s financial backbone, prepares the market for digital innovation, enhances stability, and aligns Ethiopia with global standards.
As Ethiopia modernizes, this proclamation serves as a cornerstone for a safe, competitive, innovative, and resilient banking ecosystem that supports long-term economic growth.
- Download Banking-Business-Proclamation-No.-13602025
- Download and read about Ethiopian Finance Sector Reform
