Recent Development
The Central Bank of the Republic of Turkey (the “CBRT“) amended the Communiqué No. 2013/15 on Mandatory Reserves (the “Amendment“).
What’s new?
In December 2019, the CBRT had set certain requirements for banks to be able to benefit from reserve requirement incentives. Accordingly, only banks with (i) an annual real loan growth rate above 15% and an adjusted annual real loan growth rate below 15% (including 15%) (“Group 1“) and (ii) an annual real loan growth below 15% (including 15%) and an adjusted real annual loan growth rate below 5% (including 5%) (“Group 2“) would benefit from reserve requirement incentives.
Pursuant to the Amendment, banks that have an annual real loan growth rate and an adjusted real annual loan growth rate above 15% will also be considered in Group 1, and thus will be able to benefit from reserve requirement incentives until December 25, 2020.
The scope of Group 2 remains the same, whereas the scope of Group 1 has been expanded with the Amendment.
The Amendment is retrospectively effective as of June 12, 2020.
Please see our Client Alert dated December 17, 2019 for more information about reserve requirement incentives.
Conclusion
The loan demand of individuals and entities has increased due to the adverse impact on the economy of the COVID-19 outbreak. In order to ensure the effective use of the reserves and support short-term interest rates, the CBRT has temporarily broadened the scope of banks that may benefit from reserve requirement incentives.
