2.3 Regulations and Other Actions Regarding Financial System

2.3.1 Maximum Interest Rates for Credit Cards

In February, as per the amendments introduced by the Law No. 7222 on Amendments to the Banking Law and Certain Laws, and by the third paragraph of Article 26 of the Law No. 5464 on Debit Cards and Credit Cards, the CBRT’s obligation to announce credit card interest rates at quarterly intervals was abolished. Accordingly, the maximum contractual and overdue interest rates on credit card transactions applicable until November were set as below (Table 2.3.1.1).

Table 2.3.1.1: Maximum Interest Rates on Credit Card Transactions (%)

From November on, the maximum interest rates for credit cards were determined through a predictable, rule-based method reflecting current market conditions. Accordingly, the maximum interest rates for credit cards were based on the reference rate calculated according to the Communiqué on Procedures and Principles Regarding the Fees That Banks Can Charge Their Commercial Clients (No. 2020/4) in view of the banks’ weighted average deposit rates as an indicator of the funding cost, and the calculation method for these rates was set as follows (Table 2.3.1.2).

Table 2.3.1.2: Maximum Interest Rates for Credit Cards (%)

Rates calculated according to this method are announced on the CBRT website on the fifth-to-the last business day of each month and take effect on the first day of the following month. In this scope, the maximum contractual and overdue interest rates applicable from November are shown in Table 2.3.1.3.

2.3.2 Regulations Regarding Fees

In 2020, the CBRT issued the Communiqués No. 2020/4 and 2020/7 that govern the fees that banks charge their commercial clients and financial consumers. 

Fees Chargeable to Commercial Clients

The “Communiqué No. 2020/4 on Procedures and Principles Regarding the Fees That Banks Can Charge Their Commercial Clients” published in the Official Gazette No. 31035 and dated 10 February 2020 introduced arrangements to the fees that banks can charge their commercial clients for products and services they offer. The purpose of the Communiqué is to enhance predictability and transparency in transactions that banks engage with their commercial clients, to ensure consistency of concepts and terms, and to prevent excessive pricing.

In this scope, banks were obliged to inform their clients of the fees that they would charge for the products and services they offer. This obligation is a three-staged one. Accordingly, banks, as part of general information they announce on their web sites, started to disclose the chargeable fees. The regulation also ensured announcement of such information in a comparable way on the common web sites to be developed by multiple banks.  Additionally, some arrangements were introduced to secure the inclusion of maximum charges to be collected by banks in the forms annexed to contract documents for information purposes, and to provide prior information on the amount of fees collectible for products and services in a way that would suit the mode of the transaction.

Moreover, in order to ensure consistent use of concepts and terms in fee items, the fees that can be charged for products and services offered under the categories of commercial loans, foreign trade, cash management and payment systems were listed in the annex of the Communiqué and it was stipulated that no other fee could be charged other than those given in the list. Additionally, the maximum tariffs were set for some products and services such as member business, loan allocation and lending, cash loan early payment, cash advance, electronic funds transfer (EFT)/the instant and continuous transfer of funds (FAST), and money orders. The maximum commission rates for member businesses are given in Chart 2.3.2.1.

Regulations on Financial Consumer Fees

The amendment made to Article 39 of the Law on Amendments to the Banking Law and Certain Laws No. 7222 dated 20 February 2020 amended Paragraph 3 of Article 4 of the Consumer Protection Law No. 6502 to read as “Any kind of fees, commissions and expenses apart from the interest rate that may be charged to consumers for the products and services offered by banks, financial institutions that extend credits to consumers, and card issuing institutions, as well as the procedures and principles thereof, shall be determined by the Central Bank of the Republic of Turkey by taking the opinion of the Ministry and in line with the spirit of this Law to protect consumers.” With this amendment, the authority to regulate fees and commissions chargeable on financial consumers by banks, financial institutions that extend consumer loans and card issuing institutions was transferred to the CBRT from the BRSA.

In this framework, the CBRT Communiqué on Procedures and Principles Regarding the Fees to be Charged to Financial Consumers (No. 2020/7) was published in the Official Gazette No. 31061 dated 7 March 2020. The purpose of the Communiqué is to determine the procedures and principles governing any kind of fees, commissions and expenses other than interest rates and dividends chargeable to financial consumers for the products and services offered. The fee items listed in the annex of the Communiqué are classified into the main headings as personal loans, deposits/participation funds, money and precious metal transfers, credit cards, and other. Besides, the maximum tariffs were set for some products and services such as loan allocation, cash advance, EFT/FAST and money orders.

2.3.3 Advance Loans

Advance loans against investment commitment started to be extended on 5 June 2020 pursuant to Article 45 of the CBRT Law through development and investment banks at a maximum maturity of 10 years and with a grace period of two years to the selected sectors with strategic importance in return for the receipt as advance of bills issued in Turkish lira. The applicable interest rate for such loans is 150 basis points lower than the CBRT policy rate. The purpose of advance loans against investment commitment is to support highly efficient investments that will reduce imports and boost exports, to lower external dependency as well as reduce the current account deficit problem and to support sustainable growth.

The total limit of the advance loans against investment commitment is TRY 20 billion, with a breakdown of TRY 18 billion to be extended through the Development and Investment Bank of Turkey, and TRY 2 billion to be extended through other development and investment banks. The firm-based lending limit is TRY 400 million.