Latest Developments

On July 7, 2022, the Banking Regulatory and Supervisory Authority (the “BRSA“) revealed a brand new Resolution No. 10265 (the “Resolution“) to make clear the implementation of the choice of the BRSA Resolution No. 10250 dated July, 24 2022 (“Restriction Resolution“) introducing Turkish lira borrowing restrictions for non-financial establishments which might be topic to impartial audit and to make sure the efficient implementation of the restrictions beneath the Restriction Resolution.

You could discuss with our authorized alert dated 27 June 2022 relating to the Restriction Resolution.

What’s new?

With this Resolution, the BRSA prolonged the scope of the choice in an effort to enhance the effectiveness of the restrictions, whereas offering sure flexibility to the restrictions specified beneath the Restriction Resolution.

Corporations whose overseas forex belongings (“FX Belongings”) exceed TRY 15,000,000

• The restrictions in respect of those corporations stay the identical aside from a number of clarifications. Monetary statements which might be taken as the premise for figuring out whether or not these corporations can borrow Turkish lira mortgage would be the monetary statements ready in accordance with the Tax Procedural Regulation and submitted as connected to the tax declarations (together with momentary tax declarations) to tax authority (together with momentary tax durations).
• If these corporations are obliged to arrange consolidated monetary statements, the evaluation shall be made primarily based on the monetary statements audited by impartial audit corporations. Nevertheless, overseas subsidiaries and associates is not going to be included on this evaluation.

Corporations not allowed to borrow overseas forex loans having overseas forex internet place deficit for the three-month interval following their mortgage software

• The Restriction Resolution required these corporations to submit paperwork permitted by the licensed impartial audit corporations to the financial institution in an effort to borrow money loans in Turkish lira. Following the Resolution, these paperwork now not must be submitted on the appliance date. As a substitute, these Corporations will have the ability to borrow new loans in the event that they characterize that they’ve overseas forex internet place hole by offering the quantity of place hole restricted solely to the overseas forex internet place hole within the three-month interval following the mortgage software date. The representations and undertakings should be confirmed by impartial audit corporations or licensed public accountants (“CPA“) and documented to the related financial institution by the shut of enterprise on the final enterprise day of the month following the tip of quarterly calendar interval.

Corporations whose FX Belongings don’t exceed TRY 15,000,000, or don’t exceed 10% of the upper of their internet belongings and their internet gross sales income of the final monetary yr throughout the time period of the mortgage that they’ll borrow

• With the Restriction Resolution, these corporations have been required to submit the knowledge relating to the present worth of their FX Belongings, internet belongings and internet gross sales income over the past 12 months as of the tip of the earlier month pursuant to the earlier month-end stability sheet inside the first 10 enterprise days of every month. This was along with the illustration and endeavor required to be offered by these corporations stating that the Turkish lira equal of their FX Belongings is not going to exceed TRY 15 million, and if it exceeds such quantity, it is not going to exceed 10% of the upper of their internet belongings and their internet gross sales income for the final monetary yr throughout the time period of the mortgage that they’ll borrow.
• The Resolution softened this requirement and consequently these corporations will have the ability to borrow Turkish lira loans, if they supply the aforementioned illustration and endeavor with impact from June, 30 2022 and submit supporting paperwork to the related financial institution by the shut of enterprise of the final enterprise day of the month following the tip of every quarterly calendar interval.
• The newest monetary statements submitted to the tax workplace (together with the momentary tax durations) shall be used to as proof of those points. Corporations which might be obliged to arrange consolidated monetary statements will have the ability to use the latest consolidated monetary statements audited by impartial audit corporations, with out the situation of being submitted to the tax workplace, and the overseas subsidiaries and associates of those corporations is not going to be included within the calculation.

Dedication of corporations topic to impartial audit

• Corporations, which might be topic to impartial audit and whose audit obligation will begin on the finish of 2022 for the primary time, shall be exempted from the regulation inside the scope of the Resolution.
• Though an organization making use of for a mortgage represents and undertakes that it isn’t topic to impartial audit or that its audit obligation began on the finish of 2022 for the primary time, if the financial institution has misgivings about this, the Firm can have one month to proof this reality with paperwork permitted by CPAs or impartial audit corporations. Nevertheless, the mortgage shall be prolonged primarily based on the illustration of the applicant firm.

Sanctions for failure to offer required data and paperwork

• If the businesses fail to submit the knowledge and paperwork to the financial institution as permitted by the impartial audit agency or CPA inside the specified durations, or it’s decided that they’re topic to the borrowing restrictions inside the scope of the Resolution pursuant to the knowledge and paperwork submitted, (i) no new industrial money loans shall be prolonged to such corporations and (ii) a 500% threat weighting will apply to Turkish lira money loans prolonged as of July 30, 2022 to those Corporations whatever the methodology used to calculate the quantity topic to credit score threat, in addition to the credit score threat mitigation strategies, credit score scores and actual property mortgages, for the calculation of the capital adequacy ratio pursuant to the notification by the corporate in accordance with the procedures and ideas by the BRSA.

Standing of monetary leasing, factoring and finance corporations

The Restriction Resolution was regulating the restrictions on Turkish lira money loans to be prolonged solely by banks. With the Resolution, the loans to be prolonged to those corporations by monetary leasing, factoring and financing corporations as of August 1, 2022 are actually inside the scope. The obligations imposed on the banks inside the scope of the Resolution will even apply to those corporations.

Loans exempted from the Resolution

• Loans utilized via company bank cards besides money withdrawals
• Loans transformed into money via the Direct Debit System (Doğrudan Borçlanma Sistemi)
• Provider financing loans and different loans qualifying as irrevocable restrict commitments and for which banks present cost ensures to 3rd events aside from the corporate which might be mortgage prospects, and paid to suppliers by crediting the corporate as the client
• Non-cash loans which might be indemnified and transformed into Turkish lira money loans
• Loans restructured in accordance with a framework settlement or loans which might be used on this restructuring besides loans that aren’t restructured in accordance with a framework settlement and are renewed via an modification to the present mortgage settlement after the date of the Resolution or prolonged to partially or fully refinance current loans shall be thought-about new disbursements.

Different clarifications

• Standing of Associates and Subsidiaries: Whether it is decided that the corporate (the mum or dad firm) shouldn’t be eligible for Turkish lira mortgage disbursement inside the scope of this Resolution, the mortgage restriction beneath this Resolution will apply solely to the mum or dad firm. For the loans to be prolonged to the opposite subsidiaries and associates of the mum or dad firm topic to consolidation, will probably be decided whether or not they’re topic to the mortgage limitation by contemplating the provisions specified within the Resolution individually for every affiliate and subsidiary.
• Loans Prolonged by Offshore Branches: The Resolution will even be relevant in case the overseas branches of Turkish banks make the loans.
• The Scope of FX Belongings: Participation shares of trade traded funds which might be listed to gold or overseas forex owned by the businesses or that observe such indices are additionally included inside the scope of FX Belongings.
• The Scope of Turkish Lira Money Loans: Inside the scope of the swap transactions carried out by the businesses with the banks, the quantities borrowed in Turkish lira by lending overseas forex (together with gold) on the spot will even be thought-about a Turkish lira money industrial mortgage.
• The Standing of Industrial Loans and Present Loans: The corporate’s obligation to submit paperwork relating to the money industrial Turkish lira mortgage disbursements to be made as of the date of the Resolution via credit score transactions similar to revolving, overdraft accounts (“KMH”) or company bank cards will even be carried out in accordance with this Resolution.