The workability of the Ethiopian e-banking policy and regulation has been a subject of an ongoing debate among policy makers, academicians, and international organizations; such as, World Bank. Despite the existence of many studies on Ethiopian e-banking challenges and opportunities from other disciplines, researches on the legal aspects of the e-banking regulation are scant. Generally, the Ethiopian e-banking is regulated by numerous legal documents such as Constitution, Commercial Code, Civil Code, proclamations, regulations, directives and circular letters. However, the main legislation which regulates the e-banking products and services is National Payment System Proclamation and its implementing directives. The adequacy of the ongoing e-banking regulation in protecting the rights of the e-banking consumers is questionable. Against this backdrop, this research analyzes the limits of e-banking regulations in Ethiopia. It addresses the key issues revolving around the limits of the e-banking regulation that are not responsive to the adoption and advancement of the e-banking products and services in the country: The research explores and examines the policy, legal and institutional frameworks of the e-banking business in Ethiopia. Under the legal framework part, the entry, operational and exit regulations with their respective instrument of regulation is discussed. In doing this research, mainly empirical research has employed through qualitative methodology. To this effect, the empirical part of the research employed a semi-structured interview with the key informants of the National Bank of Ethiopia, operators of the payment infrastructure and the commercial banks. Similarly, semi-structured interview is employed in collecting primary data from the consumers of the e-banking, and from the merchants who uses POS terminal as a payment method. Over that, focus group discussion data collection method is also employed. In doing the doctrinal analysis, doctrinal research method is employed in collecting and analyzing the country’s laws that regulate e-banking business. The main finding of the research is that in spite of the fact that Ethiopia has a primary legislation that regulates the national payment system which in turn includes the e-banking business, but the primary legislation only provides the basic framework and delegates the NBE to issue directives on many issues of the e-banking products and services. But, the NBE with the exception of the vague Regulation of Mobile and Agent Banking Service Directive has not come up with a comprehensive directive that covers all areas that it is delegated to issue directives by the primary legislation, but by now, the NBE prepares a draft directive that is expected to regulate the e-banking business in the future. Though it early to comment on it, but still the Draft Directive fails to regulate very important issues of e-banking including cheque truncation, issuance of payment instruments, dispute settlement system (it only provides internal complaint handling procedure), cross-border e-banking, authentication of e-banking signatures, and admissibility of e-banking records. Second, by now, the NBE has not yet issued a directive that regulate the basic terms and conditions of the e-banking agreements; thus, the commercial banks at their own discretion determines the terms and conditions of the e-banking, and this puts the protection of the consumer’s right questionable. Third, though the commercial banks are obliged not to order their customers to submit his case before the owner of the electronic terminal for erroneous e-banking transactions happened in an interoperable payment system, but in practice, the commercial banks are ordering their customers to submit their case before the owner of the electronic terminal by violating the regulation, and customers wait for long period of time even months to get their money back. Fourth, by now, there is no law that regulates the allocation of losses that happened due to fraudulent and erroneous e-banking transactions and over that the commercial banks transferred all liabilities to their customers using the terms and conditions of the e-banking service agreement. Fifth, both the current and the upcoming regulations leave the e-banking transaction limits to be specified by the commercial banks and even the commercial banks don’t have the obligation to notify the NBE about this, and in practice the commercial banks provides transaction limits at their own discretion even without taking into account the risk of the e-banking business into account; and this defeats the end goal of the need of transaction limits. Sixth, by now, there is no any law that empowers the NBE to regulate the fees and charges associated with the e-banking business, and the existence such regulation may create a conducive environment to the giant commercial banks to abuse the market. Seven, though there are significant financial losses happened