The decision of the Banking Regulatory and Supervisory Authority ("BRSA") dated 24.06.2022 and numbered 10250 ("Decision") was published on its official website, which entered into force as of its publication date.
What Does the Decision Bring?
The decision imposes some restrictions for use of commercial loans in Turkish Lira ("TRY") currency to the corporate borrowers that meet certain conditions.
What is regulated in the Decision?
a. Scope for Companies
- According to the Decision, as of 24 June 2022, a new cash commercial loan (of any kind) in TRY currency will not be extended to the below stated companies:
- Companies being subject to independent audit;
- Companies having Foreign Currency (“FX”) cash assets more than TRY 15 million, and
- Companies whose FX cash assets exceed 10% of their total assets in TRY equivalent or the net sales revenue of the last 1 year.
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However, pursuant to the exception provided within the Decision companies that meet the following conditions will be allowed to use cash commercial loans in TRY up to the amount of the gap between their FX liabilities and FX assets, provided that;
- Such company is unable to use FX-denominated loan due to the relevant legislation, and
- Companies having FX net position deficit within 3 months from the date of loan application to the relevant bank, as approved by the independent audit firm.
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Companies whose FX cash assets do not exceed TRY 15 million are not subject to the loan restriction, but such companies must, as of the loan application date;
- Have their current total FX cash assets, net assets and the last fiscal year net sales revenue determined by an independent audit firm according to the latest financial statements,
- Declare and undertake that during the maturity term of the loan they will use, the TRY equivalent of the FX cash assets will not exceed TRY 15 million or even if it does, it will not exceed 10% of the total assets or the net sales revenue of the last fiscal year, and
- Submitting to the bank the current value of their FX cash assets, total assets and net sales revenue of the last 12 months as of the end of the previous month according to the previous month-end balance sheet, within the first 10 working days of each month.
- Real persons and real person company shareholders are excluded from the scope of the Decision.
b. Scope for Cash Assets
- FX cash assets include gold, FX cash and deposits in banks, FX denominated securities and shares issued by non-residents and other monetary assets such as reverse repos conducted with non-residents.
- Other monetary assets consisting of FX-denominated securities and debt instruments such as Eurobonds issued by residents are excluded from the scope of the Decision.
- Loans restructured after the date of 24 June 2022 in accordance with the relevant legislation will not be deemed as a new credit utilization.
c. Scope for Loans
- The calculation of the balance increase to be madeat the end of each month for cash commercial TRY loan disbursements to be realized as of the date of 24 June 2022 through credit transactions such as revolving loans, overdraft accounts or corporate credit cards will be deemed as new disbursement, and in case of a balance increase compared to the end of the month before the calculation date at the end of each month, the documents approved by the independent audit firm must be submitted to the bank until the calculation to be made by the end of the month.
- In case of a balance risk amount as of the calculation date at the end of each month in the overnight loans, the documents approved by the independent audit firm must be submitted to the bank until the calculation to be made at the end of the month.
- In terms of the loans that will expire and be renewed within the week of 27 June 2022 the required documents must be completed until the calculation to be made at the end of this month and only if the balance increase has occurred compared to the end of the previous month.
- In terms of the spot TRY denominated cash commercial loans for which applications were made before 24 June 2022 and whose contracts were concluded but have not yet been disbursed and will solely be allocated within the week of 27 June 2022, there is no need to make any additional control and the relevant loans will not be affected by the Decision.
- Non-cash loans, such as the Direct Debit System, are not covered within the Decision unless they are converted into cash loans.
d. Information and Documents to be Used in Determining the Scope
- Whether a company is covered within the scope of the Decision or not will be determined by certifying the current value of its total FX cash assets, total assets and net sales revenue of the last 1 year determined and approved by an independent audit firm pursuant to the most recent fiscal statements.
- Foreign exchange buying rate of the Central Bank of Türkiye applicable on the calculation date will be taken as the basis for calculating the TRY equivalent of FX cash assets.
The Decision will remain in force until a decision to the contrary is issued by the BRSA. You may find the Turkish version of the Decision
here,and the related detailed press release
here.
MORAL & PARTNERS
Burak Batı, Associate