Recent development

To boost domestic demand for home appliances, furniture and educational services, on November 25, 2015, the Turkish Banking Regulatory and Supervisory Authority ("BRSA") relaxed its restrictions on installment payment plans, amending three regulations: the Regulation on Debit and Credit Cards, theRegulation on Bank Credit Transactions, and the Regulation on Establishment and Operating Principles of Financial Leasing, Factoring and Financing Companies.

What the BRSA did

  • Consumer and corporate credit card purchases of home appliances and furniture, as well as educational spending, can now be made in installment payment plans of up to 12 months, up from the previous nine-month limit.  
  • The current consumer credit term limit of 36 months no longer applies to loans for housing renovations that are an integral part of the immovable property or to educational services.  
  • The nine-month installment limit remains in place for other goods and services purchased using corporate and consumer credit cards.  
  • The four-month installment limit remains in place for jewelry purchased using consumer credit cards. 
  • No installment payment plans using consumer credit cards can be provided for goods and services purchased in relation to telecommunications, food, gasoline and gift cards.

Conclusion

In February 2014, the BRSA imposed restrictions on installment payment plans for credit card purchases to limit the growth in loans and consumer spending in Turkey, given the increasing current account deficit. These amendments, while maintaining macro-prudential supervision, address goods and services that will increase domestic demand without increasing the current account deficit further.