Watchdog moves to limit payment in installments and loans

ANKARA – Anadolu Agency

Payment in installments will not exceed nine months for most of the purchases, Banking Regulation and Supervision Agency’s (BDDK) head has said. AA photo

Turkey’s banking watchdog has announced tighter rules on credit card payments and loans as part of the government’s plan to regulate banking services and limit the debt burden of households.
 
According to the Banking Regulation and Supervision Agency’s (BDDK) draft legislation, payment in installments will be limited to six months for purchases in electronics, jewelry and car rental, while it will be limited to a maximum of 12 months for purchases of domestic appliances and furniture. No payment in installment will be possible for grocery store or gasoline purchases.
 
Car loans will be limited to 70 percent of the total amount for vehicles that cost less than 50,000 Turkish Liras. The draft also foresees the restriction of consumer credit to a 36-month loan and of car credits to 48-months.
 
“We are carefully following the factors carrying a potential of risk for the system,” BDDK President Mukim Öztekin said, adding that the draft bill aimed to prevent the excessive accumulation of debt by families.
 
The government had announced its intention to regulate loans issued by banks for consumption and reduce interest rates. 
 
“If loans are issued to increase exports, production and investment, and, not to mention, to support small and medium size enterprises, we will say ‘yes’; however, we will say ‘no’ to loans that are issued for the sole purpose of increasing consumption, as the exhaustion of such a measure will only cause harm to our economy,” Deputy Prime Minister Ali Babacan said on Nov. 14, adding that the Turkish economy should improve its saving habits that would enable improving investments.
 
According to an IPSOS report, Turkish people were unable to save money as a result of high debts due to loans and payment installments.