Turkish banking watchdog announces details of commercial loans decision

ISTANBUL

Türkiye’s banking watchdog has announced the details of commercial loans decision revealed on June 24, while emphasizing that the decision is a measure taken to strengthen financial stability, use resources more efficiently and productively, and ensure that the credit system works effectively.

“In order for any company to be within the scope of the decision, it must be subject to independent audit, and the Turkish Liras equivalent of the company’s foreign currency cash assets [including gold] must be above 15 million liras,” the Banking Regulation and Supervision Agency (BDDK) said in a written statement.

“In addition, the foreign currency cash assets of the company must exceed 10 percent of the total assets of the lira equivalent or the net sales revenue of the last one year, whichever is greater. All three conditions must be met.”

Companies that are not able to use foreign currency loans will be able to use cash commercial loans in Turkish lira, provided that the independent auditing firms determine that their foreign currency debts are more than their foreign currency assets in any three months following the date of application for the loan.

They will be able to use cash lira loans up to the amount of the difference.
Companies whose foreign currency cash assets do not exceed 15 million liras will not be included in the credit limit within the scope of the decision.

In calculating the lira equivalent of foreign currency cash assets, the Turkish Central Bank’s buying rate of exchange in the calculation date will be used.

The watchdog also said that necessary legal action could be taken against those who led to the opening of a loan that should not have been allocated by taking misleading and collusive actions to circumvent the decision.

Although some companies do not have foreign currency debt or even have foreign currency surplus, they buy foreign currency using Turkish lira loans and hold foreign currency positions, the watchdog said.

According to the statement, banks had previously given instructions to show maximum care in order to prevent the use of loans in the realization of transactions that are not suitable for their purpose.

“Lira-denominated loan resources that need to go to production, employment and investment continue to be used by some companies for foreign exchange purchase, even though there is no real need,” the watchdog added.

According to the financial daily Dünya, following the decision that prevented companies with more than a certain amount of cash from accessing Turkish lira loans, some banks stopped the Turkish lira loans until the details of the regulation become clear.