The Turkish central bank introduced regulatory changes that reward banks that lend more in August 2019/Bloomberg
by Kudakwashe MuzoriwaTürkiye Cumhuriyet Merkez Bankası (TCMB), the central bank of Turkey, has changed reserve requirement regulations to help channel loans towards productive and production-oriented sectors to support sustainable growth.
The central bank said that the move is in response to the impacts of the recent surge in consumer loans on economic growth, inflation and external balances as well as the increase in loan growth triggered by lira borrowing extended to facilitate early repayment or restructuring of foreign exchange cash loans.
In a statement, TCMB said that the new practise will help channel loan supply toward productive and production-oriented sectors that will support sustainable growth, rather than consumption, affect the current-account balance positively and support financial stability.
Banks with real annual loan growth of more than 15 per cent and adjusted real loan growth to selected sectors of below 15 per cent, and banks with real loan growth below 15 per cent and adjusted real loan rate above five per cent will be able to benefit from the incentive changes, according to the statement.
The industries included agriculture, forestry and fishing, mining, manufacturing, electricity, gas, steam and air conditioning supply, and transportation and storage.
Bloomberg reported that the Turkish central bank introduced regulatory changes that reward banks that lend more in August 2019.
According to TCMB data, total loans increased by more than 12 per cent in January 2020 compared with a year earlier, while consumer loans were 25 per cent higher at the end of February 2020.
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