Minimum interest rate requirement removed for TL-converted FX-protected deposit accounts

The Central Bank of the Republic of Turkey (CBRT) continues its steps to transform the banking system in a way that makes the TL attractive.

With the change made to the implementation instruction, the minimum interest rate requirement for TL-converted FX-protected accounts has been removed. Thus, the way has been paved for banks to offer interest rates below the policy rate for TL-converted FX-protected accounts.

With this change, while standard TL deposits are being supported, the interest offered on KKM will no longer be attractive.

In KKM accounts where rates lower than the Central Bank's policy rate are applied, if the exchange rate difference is higher than the interest or profit share to be paid by the bank but lower than the amount calculated with the policy rate, the entire difference will be covered by the bank.

If the exchange rate difference is higher than the amount calculated with the policy rate, the portion of the support amount up to the amount calculated with the policy rate will be paid by the bank, while the portion exceeding it will be paid by the Central Bank.

CBRT aims to make Turkish lira deposits attractive

The CBRT had taken a series of steps to make Turkish lira deposits attractive.

In August, the TL share ratio, which included FX-protected accounts in TL deposits in securities and reserve requirement practices, was abolished and replaced with a new TL share ratio that does not consider FX-protected accounts as TL deposits and aims to increase the share of standard local currency TL deposits within total deposits.

In September, in line with data showing that transitions to TL were accelerating, the monthly TL share increase target, which was set at 2 percent for individuals, was raised to 2.5 percent. Additionally, revisions were made to the calculations for transitions to TL, renewals, and TL shares.

On the other hand, in order to ease credit flow, the invoice exemption limit for export, investment, and SME loans was increased from 50 thousand TL to 250 thousand TL.