This study is intended to review impact government banking policies and directives onrnprivate bank competitiveness from year 1994 to 2015. The study is done with the mainrnobjective of assessing effects of regulations on resource mobilization and allocationrndecisions of these private banks. To do so, the study employed qualitative researchrnapproach in order to get better and deep information. Besides, both primary andrnsecondary data sources were used to examine the issue under discussion. To this end,rnreview of different secondary data was administered. In addition, to better triangulaternthe study findings, interview with key informants was held.rnDrawing documentary study and data from the primary sources, various issues ofrngovernment policies and directives was assessed. The study found out that despiternprogress, Private Banks in Ethiopia have challenges from government policies andrndirectives which hinder their competitiveness. The empirical results show that, there isrnno equal playing field between private and state owned banks, to begin with, the NBErnBill is applicable only to private banks, Secondly public sector offices and enterprisesrnare forced to work with CBE and alsornresources for condominium housing wasrnmobilized only by the public owned CBE, so, this unequal treatment of private andrnstate owned banks negatively affected private banks. Thus, government bodies shouldrnrevisit some directives issued on private banks, encourage the participation of thernprivate banks so as to play a vital role in the economy and private commercial banksrnshould strive to expand and grow since, their share is significant in terms of branchrnnetworks and capital