BRSA sets new rules for fund management and contract limits for savings finance companies

The Banking Regulation and Supervision Agency (BRSA) has prepared a new regulation regarding the fund management and contract limits of savings finance companies. With the instruction sent by the agency to the Presidency of the Participation Banks Association of Turkey, the goal is to ensure that resources accumulated in savings fund pools and company accounts are invested in lower-risk and more liquid assets.

According to the new framework, companies will only be able to hold these resources in specified investment instruments. These instruments are listed as: special current accounts or participation accounts in Turkish Lira opened at participation banks, domestic lease certificates (sukuk) in Turkish Lira not based on gold issued by the Ministry of Treasury and Finance, and participation-based investment funds in Turkish Lira with a risk rating of 1 or 2.

The BRSA has also introduced a limitation on amounts sitting idle without returns in savings fund pools. Accordingly, the daily non-interest-bearing balance cannot exceed 0.2 percent of the savings fund pool calculated as of the end of the previous month. Amounts transferred to the pool after the closing time of the Central Bank of the Republic of Turkey's Electronic Fund Transfer system will be included in the following day's account.

LIMITS ON HIGH-VALUE CONTRACTS

The regulation also increased high-value contract limits. The general high-value contract limit was raised from 2 million 509 thousand 800 liras to 5 million liras. The limit applicable to housing or roofed workplace finance contracts was increased from 6 million 274 thousand 500 liras to 12 million 500 thousand liras.

Furthermore, the ratio of the total size of high-value contracts to the total contract amount in the relevant period has been capped at 5 percent. A transition schedule will be applied for companies established after January 1, 2025. For these companies, the ratio will be 15 percent until June 30, 2027, and 10 percent between July 1 and December 31, 2027.

The number of contracts that can be made on an individual and risk-group basis has also been reorganized. A natural or legal person will be able to sign a total of two contracts with the same savings finance company, consisting of at most one vehicle and one housing or roofed workplace finance contract.

Maximum contract amounts on an individual or risk-group basis have also been raised. The upper limit for vehicle finance has been set at 6 million 250 thousand liras, and 62 million 500 thousand liras for housing or roofed workplace finance. The total amount of all contracts belonging to one person or the same risk group cannot exceed 62 million 500 thousand liras.

The BRSA announced that a transition period has been granted for companies to comply with the new rules. It was stated that the regulations will come into effect as of October 1.

News Source: 12punto