Central Bank issues reserve requirement instruction to banks

The reserve requirement commission to be applied for the TL share has been set at 3 percent. For banks that meet the targets, it will be possible to reduce the commission to zero. The letter recalled that it was previously stated that a commission would be charged on reserve requirements established for foreign currency liabilities.

The instruction also emphasized the warning that measures would be taken regarding the renewal of FX-protected accounts, the transition to TL, and increasing the share of the Turkish lira in the commission application.

8 PERCENT COMMISSION FOR KKM ACCOUNTS

In this context, the statement included the following: "A commission application has been initiated at an annual rate of 8 percent, to be differentiated according to the conditions determined by the CBRT for accounts provided with exchange rate/price protection support, and at an annual rate of 3 percent, to be differentiated according to the determined Turkish lira share."

The rates that will form the basis for the commission rate to be charged on renewal and TL share were determined as above and below 100 percent. Accordingly, banks with a renewal and transition to TL rate below 100 percent, and participation banks remaining below 85 percent, will pay a commission of over 6 percent.

For banks above these targets, it will be possible to reduce the rate to 0 percent. The commission based on the TL share will also be a maximum of 3 percent, and can be reduced to 0 if the target is exceeded.

BANKS WITH DEPOSIT AMOUNTS BELOW 500 MILLION LIRA EXEMPTED

Furthermore, the instruction included details on how the reserve requirement commission application will be calculated based on the TL share transition rate. Accordingly, a 2 percent commission will be deducted from banks where the change in the TL share ratio for individuals compared to 4 weeks ago remains below 3.5 percent, and a 1 percent commission will be deducted from banks that remain below the share calculated on August 18, 2023, for legal entities. Banks with maturing deposit amounts below 500 million lira were exempted from the commission to be applied regarding renewal and transition to TL.

EXEMPTION THRESHOLDS

Apart from this, banks where the denominator part in the Turkish lira share calculation for individuals is below 15 billion Turkish lira, and banks where the denominator part in the Turkish lira share calculation for legal entities is below 10 billion Turkish lira, were also exempted from the application.

Additionally, it was decided in the instruction that the individual Turkish lira share increase target for participation banks will be applied as 1.75 percentage points instead of 3.5 percentage points. However, it is noted that the number of banks that can benefit from the exemption is very limited.