Banks introduce curbs on credit card cash advances

ISTANBUL

Turkish banks have introduced limitations on the number of installments on credit card cash advances after the Central Bank said it was closely watching credit card spending.

Some lenders cut the number of installments on cash advances this week, banking sector sources said.

Both public and private banks reduced the number of maximum installments from 12 to three months, according to the sources.

Central Bank Governor Fatih Karahan said in February that the authorities were closely watching the spike in credit card spending and that they were working on this.

According to the data from the Banking Regulation and Supervision Agency (BBDK), the annual growth in credit card spending was 154 percent in January, while the total loan growth was more than 50 percent.

Banks, however, are not taking any measures on credit cards other than the limitation on cash advances, said the sources.

The number of credit cards in Türkiye increased by 17 percent year-on-year to 119 million in January, according to the latest numbers from the Interbank Card Center (BKM).

Meanwhile, rates on commercial loans have increased sharply.

Some private lenders increased the annual interest rate on commercial loans from 48 percent to 77 percent in February, one banking source said, adding that public banks also raised the rates from 52 percent to 56 percent.

The interest rate on commercial loans was 54.06 percent on average as of March 1, according to data from the Central Bank. The rate climbed to 54.36 percent in the week ending Feb. 9, the highest level since March 2002.

The monthly rate on personal loans charged by some public banks also increased from 4.24 percent to 4.4 percent, while some private banks hiked the rate above 5 percent.

The Central Bank last week additional tightening measures to reinforce its commitment to a tight monetary policy stance, making adjustments within the scope of the loan growth-based securities maintenance practice.

Accordingly, the monthly growth limit for lira commercial loans was reduced from a previous 2.5 percent to 2 percent.

The monthly growth limit for general-purpose loans, previously set at 3 percent, was revised down to 2 percent.

To curb demand and bring inflation under control, the Central Bank hiked the main policy rate from 8.5 percent in last June to 45 percent.

In a report issued this week, analysts at Bank of America argued that they now see a 300-500 basis point hike as possible in April.

“If the Central Bank hikes in March or April, we think that capital inflows can restart in the second quarter,” they said.