Bank loans decelerate amidst restrictive measures

ISTANBUL (CIHAN)- The annual rate of increase of loans extended by the Turkish banking sector has fallen below 30 percent largely owing to the government’s attempts to cool down the economy through restrictive loan policies.

According to figures released by the Banking Regulation and Supervision Agency (BDDK) on Monday, total loans extended by Turkish banks since April 2013 have increased to TL 1.09 trillion from TL 844.4 billion, corresponding to a 29 percent rate of increase. The same rate was 32 percent last year. The rate of change in the quantity of total loans in the sector was 3.35 percent compared to the same level in the beginning of 2014.

The BDDK has applied severe restrictions on the use of credit cards, especially with regard to electronic devices, and has limited the number of installments to a maximum of nine months and has completely banished credit sales for mobile phones. These prohibitive measures were accompanied by limitations on installments for all types of individual loans. The BDDK also introduced lower ceilings for loans, obliging consumers to ask for less money from banks for mortgage and vehicle loans.

These measures are in line with the targets stated by the government’s economy-related ministers and bureaucrats and the organization responsible for implementing monetary policy, the Central Bank of Turkey, to hit the brakes and reduce loan expansion to about 15 percent per year. They fear that any acceleration in individual loans beyond this point would be too risky for the overall health of the economy, especially considering that the high growth rates systemically work to the detriment of the current account balance.

(CihanToday’s Zaman) C