The share of overdraft accounts in the banking sector has reached a record level
According to data from the Banking Regulation and Supervision Agency (BDDK), the share of overdraft accounts in total loans has reached a historic peak of 4.16 percent.
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High inflation and tight monetary policies continue to drive individuals and companies toward overdraft accounts. According to the BDDK's weekly data, the total balance of individual and commercial overdraft accounts has risen to 4.16 percent of the banking sector's total loan balance. This rate marks a historic peak, having increased fourfold over the last three years.
CHANGES IN INTEREST RATES
The new economic management, which took office in June 2023, began implementing tight monetary policies as part of the fight against high inflation. While this has made access to credit more difficult, interest rates on overdraft accounts have also risen. Following the Central Bank's latest interest rate decision, the maximum contractual interest rate for overdraft accounts was set at 4.5 percent, and the maximum late payment interest rate at 4.8 percent. These rates were at 5 percent and 5.3 percent last November, respectively, before being reduced to their current levels with the interest rate cut in September.
DEVELOPMENTS IN THE BANKING SECTOR
According to BDDK data, the balance of individual overdraft accounts exceeded 654 billion liras as of the week of October 21, while the balance of commercial accounts reached 219.6 billion liras. While total loans have increased by 208.4 percent over the last three years, individual overdraft accounts have grown by 1,245.2 percent, and commercial accounts by 291.6 percent. Compared to last year, individual accounts increased by 82 percent and commercial accounts by 56.3 percent, while the increase in total loans remained at 42.5 percent.
In public deposit banks, the share of individual and commercial overdraft accounts in total loans reached 4.31 percent. In domestic private deposit banks, this rate rose to 5.59 percent, the highest level in the sector. In foreign deposit banks, the share of total overdraft accounts stood at 5.06 percent.
In conclusion, the share of overdraft accounts in the banking sector continues to rise rapidly due to economic conditions and changes in interest rates.