Credit committee can be established

The "Regulation on Bank Lending Operations" prepared by the BRSA has been published in the Official Gazette and has entered into force.

According to the regulation, the authority to grant loans in banks will primarily belong to the board of directors. The board of directors will be responsible for establishing policies regarding granting loans, providing approvals, and other administrative principles, ensuring their implementation and monitoring, and taking necessary measures. The board of directors may delegate its loan-granting authority to a credit committee to be established or to the general directorate. The written proposal of the general directorate will be required for the board of directors to grant loans or delegate authority. For loans to be granted under the authority of the board of directors, the credit committee, the general manager, the deputy general manager, or committees including the general manager or deputy general manager, it will be mandatory to attach financial analysis and intelligence reports of those requesting the loan.

In determining the credit limit to be granted to a real or legal person, the board of directors may delegate a maximum of ten percent of equity to the credit committee and one percent to the general directorate. The general directorate may also use the loan-granting authority delegated to it through other units, regional directorates, or branches.

The authority must be clearly and detailedly defined in writing by the board of directors, including the scope and limits, covering matters that must customarily be determined when granting a loan, such as the amount, type, and collateral to be taken, and must be delegated before the loan is granted.

Those authorized to grant loans will not be able to participate in the evaluation and decision-making stages regarding loan transactions to which they, their spouses, their children under guardianship, or other real and legal persons forming a risk group with them are parties, and they will notify the audit committee of this matter in writing. This paragraph will not apply to loans granted to the risk group to which the bank belongs, regarding those who are included in the risk group to which the bank belongs pursuant to the second paragraph of Article 49 of the Law, solely due to their status as the bank's general manager or members of the board of directors.

Evaluation, approval, and workflow processes for loan transactions, service contracts, purchase and sale of goods, and similar transactions made with the risk group to which the bank belongs and the persons specified in the first paragraph of Article 50 of the Law will be determined in writing by the board of directors. Service contracts, purchase and sale of goods, loan transactions, write-offs of loans, and similar transactions above the materiality threshold to be determined by the board of directors will be carried out subject to the prior approval of the board of directors. The Board will be authorized to set limits regarding the aforementioned materiality threshold. The conditions sought in lending and other transactions must not differ from market conditions at all stages, including allocation, payment, and collateralization related to these transactions.

Persons involved in decisions and processes regarding loans to be granted to the aforementioned persons and other transactions to be carried out with them must be determined in a way that prevents conflicts of interest. Senior management will be responsible for taking all measures to ensure that credit allocation and monitoring units show maximum attention to compliance with the conditions regulated in this article.

Whether the bank's transactions within the scope of this article are established in the required manner, as well as the monitoring and reporting of these transactions, will be reviewed by internal audit units. The identified deficiencies, together with the recommended measures to be taken, will be reported to senior management.

Formation of the credit committee

A credit committee may be established, consisting of at least two members selected by the bank's board of directors from among its members who meet the requirements sought for the general manager, excluding the duration, according to Article 25 of the Law, and the bank's general manager or their deputy, to perform the duties assigned by the board of directors regarding loans. Two substitute members will be selected from among the board members who meet the requirements sought for the general manager, excluding the duration, to serve in place of any credit committee member who cannot attend a meeting. The affirmative vote of at least three-quarters of the board members will be required for the selection of credit committee members and substitutes.

In the event that a credit committee is established in foreign banks operating by opening branches in Turkey, the board of directors will simultaneously perform the duties of the credit committee.

The credit committee will meet with the participation of all members. Decisions taken unanimously by the credit committee will be implemented directly, while decisions taken by majority vote will be implemented after the approval of the board of directors. The committee agenda is determined by the general manager or their deputy in the absence of the general manager and will be announced to other members. The written proposal of the general directorate will be required for the credit committee to grant a loan.

The board of directors will be responsible for supervising the activities of the credit committee. Each member of the board of directors will be authorized to request any information regarding the committee's activities from the credit committee and to perform any control they deem necessary.

Credit committee decisions will be recorded in the decision book. The credit committee decision book will be kept according to the procedures and principles to which the board of directors' decision book is subject.

Banks will be obliged to measure the risks to which they will be exposed due to their loans, to regularly analyze and monitor the financial strength of the counterparty, to obtain the necessary information and documents, and to determine the principles regarding these.

It has been made mandatory for banks to obtain an account status document from customers for cash and non-cash loans to be granted above five million Turkish Liras.

Limitations on housing, vehicle, and other consumer loans

For loans to be granted to consumers for the purpose of acquiring housing, and for housing-collateralized loans excluding vehicle loans, the maximum limit of the loan-to-value ratio will be determined in accordance with the fourth paragraph. It will be mandatory for the valuation of real estate taken as collateral for the loans subject to the limitation to be performed by valuation companies authorized by the Board or the Capital Markets Board and for these values to be used in the limitation.

For vehicle loans to be granted to consumers for the purpose of acquiring passenger vehicles, and for vehicle-collateralized loans or financial leasing transactions to be made, the maximum limit of the loan-to-value ratio will be determined in accordance with the fourth paragraph. The motor insurance value will be taken as the basis in determining the value of the vehicle for second-hand passenger vehicles.

Except for loans granted to consumers for the purpose of acquiring housing and housing renovation in a manner that constitutes an integral part of the housing as regulated in Article 684 of the Turkish Civil Code No. 4721 dated 22/11/2001, for the purchase of goods or services, the leasing of housing to consumers through financial leasing, other loans for the purpose of purchasing real estate, loans to be granted for the purpose of financing education and tuition fees, and loans granted for the purpose of financing debts to public institutions and organizations on the condition that payment is made directly to the account of the relevant institution or organization, as well as loans granted for the purpose of restructuring these loans, the maximum maturity to be applied in consumer loans and the restructuring of consumer loans will be determined in accordance with the fourth paragraph.

The Board will be authorized to determine the limitations contained in this article or to impose additional limitations, upon taking the opinion of the Strategy and Budget Presidency and the Ministry of Treasury and Finance.

News Source: 12punto