Expect only “moderate growth” after clampdown on credit cards and loans – Turkish finance minister

The Turkish finance minister has warned the country to expect only modest growth as the government moves to control credit card and loan-related debt.

Turkey’s Banking Regulation and Supervision Agency’s (BDDK) announced November 26 that it would limit the use of monthly instalments to pay off loans and increase minimum credit card repayments in the hope of clamping down on rising debt levels.

Minister Mehmet ?im?ek said: “Turkey should continue on its path with moderate growth rates until the current account deficit is lowered permanently.

“We are now intervening more when we are making regulations, but with macro-prudential measures, which don’t limit competition.”

According to draft legislation released by the BDDK, credit card limits must not exceed twice the monthly income of cardholders in the first year of ownership.

As of January 2014, cardholders whose credit card limits are up to TRY15,000 ($7,450) must pay 30% of their debt as a minimum payment rather than the 25% they had to pay previously.

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Cardholders whose limit is between TRY15,000 and TRY20,000 must pay 35% of their debt rather than 30%.

Payments in instalments will be restricted to six months for electronics, jewellery and car rentals and 12 months for domestic appliances and furniture.

Payment in instalments will not be allowed for grocery store or gasoline purchases.

The draft legislation also restricts consumer credit to a 36 month loan.

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