Central Bank introduces new limits on credit growth

The Central Bank of the Republic of Turkey (CBRT) has introduced new restrictions on growth limits for personal and commercial loans as part of its monetary tightening policies. In line with this, growth limits for overdraft accounts and consumer loans have been reduced, and new requirements for banks will be activated in case of rule violations.

With the regulation on individual loans, the 8-week growth limit for personal and vehicle loans has been reduced from 4 percent to 3 percent. For Overdraft Accounts (KMH), one of the most frequently used banking products, this rate has been lowered from 2 percent to 1 percent. Thus, the aim is for individual demand to proceed in a more controlled manner.

Restrictions on commercial loans have also been reshaped. While the growth rate for Turkish lira loans granted to large-scale firms has been reduced from 3 percent to 2 percent, the limit for the SME segment has been revised from 5 percent to 4.5 percent. With this step, a selective contraction has been prepared within the framework of an approach that supports production and investment.

Within the scope of the measures taken, if banks exceed the determined credit growth limits, an amount of Turkish lira equal to the excess will be blocked as required reserves. This regulation is notable for directly restricting the increase in credit distribution.

On the other hand, loans provided for exports, investments, agriculture, and public projects have been exempted from the new growth restrictions. Thus, the Central Bank aims to continue supporting strategic sectors that contribute to the economy.

The recent changes will cause banks to maintain their credit policies more cautiously. These measures, which are expected to create a braking effect on short-term consumer spending, also aim to increase the effectiveness of the monetary transmission mechanism.