Introduction to Foreign Exchange Operations

The module helps banks stay aligned with the National Bank of Ethiopia's (NBE) directives on Forex operations. The alignment happens through the management of foreign exchange operations including the retention foreign currency accounts along with defining the applicable percentages and liquidation days with exporters, service providers to foreign customers, resident companies, institutions, individuals, and government organizations other than diplomatic mission who continually receives incoming foreign remittances. Moreover the module caters for the generation, utilisation and management of FX permits and purchase orders (unique and sequential) as a way to manage and control the importing and exporting activities.

Retention Accounts

In accordance to the directives of NBE, banks in Ethiopia are authorised to establish retention foreign currency accounts to exporters, service providers to foreign customers, resident companies, institutions, individuals, and government organisations other than diplomatic missions who continually receive incoming foreign remittances.

This functionality allows banks to manage foreign exchange operations. This includes the retention of foreign currency accounts, the definition of applicable percentages and liquidation days with exporters, service providers to foreign customers, resident companies, institutions, individuals and government organizations other than diplomatic missions who continually receives incoming foreign remittances.

There are two types of retention accounts:

• Retention account A where 30% of their earnings are kept in foreign currency and can be used by account holders for an indefinite period of time.
• Retention account B where 70% of account holder’s foreign exchange earnings are kept in this account. Account holders can retain their foreign currency holdings in account B only for 28 days after which they are obliged to sell to commercial banks. After the 28th day, banks are also obliged to convert the balances in account B and pay the Birr equivalent or deposit to their local account.

Users can open two new retention accounts along with the main account. The foreign currency earning, when credited to the main account, will be split into two retention accounts based on the parameter percentage.

The following items have been introduced as part of this functionality:

• The Create Retention Ac field has been introduced in the account property class to allow the creation of two retention accounts along with the creation of the main account.
• The ETFXOP.PARAM,INPUT version allows users to capture the retention account parameter related details.
• The ETFXOP.RETENTION.TRANSFER application is used to store the details of the transactions for the retention accounts.
• The ETFXOP.ACCOUNT.LIST enquiry allows users to list the retention accounts.