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Wednesday, June 28, 2017

Central Bank of Turkey monitoring non-bank financial institutions, may extend reserve requirements

The Central Bank of Turkey recently announced that it is monitoring non-bank financial institutions for financial stability and could introduce a new regulation to extend reserve requirements if deemed necessary.

Because of a rapid rise in loans extended by financing company, they have been included in the reserve requirements coverage in order to prevent unfair competition and to ensure sound monitoring of the credit channels of the non-bank sector, the bank said.

Financing companies will hold required reserves for their liabilities for accounts to be opened with the CBRT under the current ratios applied to the banks.

As of June, the Turkish lira and foreign exchange liabilities of financing companies subject to reserve requirements are $3.59 billion and $1.52 billion, respectively, and are expected to generate required reserves of approximately $455 million.

The regulation will be effective as of the calculation period dated December 6, and the maintenance period will begin on December 20.