Introduction
New pricing principles
Commercial loans
Collateralisation

Prepayment fees
Enforcement



Introduction

The Communique on Procedures and Principles Regarding Fees to be Collected from Commercial Customers by Banks (2020/4) was published in the Official Gazette on 10 February 2020. The communique aims to:

  • determine the type, quality and maximum amount or rate of fees to be collected for providing products and services;
  • ensure the accuracy of concepts and terms;
  • prevent overpricing; and
  • increase the predictability and transparency of transactions conducted between Turkish banks and their commercial customers.

The communique's scope includes fees that banks can offer to their 'commercial customers', apart from financial institutions, which are defined as real or legal persons acting with commercial or professional purposes.

New pricing principles

The communique limits the fees that banks can receive for products and services within the scope of commercial loans, foreign trade, cash management and payment systems based on the fees specified in the Annex-1 of the communique. The definition and scope of these fees are regulated by the Central Bank.

The communique states that if a product or service cannot be offered for any reason other than circumstances from which the commercial customer desists, no fees other than those to be paid by banks to third parties and reasonable fees proportional with transactions made, if the product or service was provided by the bank itself, will be collected and the fees that have already been charged will be returned.

Commercial loans

The communique regulates the fees that can be collected by banks from the establishment of a credit relationship to the closure of a loan with regard to cash and non-cash loans outside the scope of foreign trade transactions. It indicates that banks classify loan allocation and loan disbursement processes as two different sub-items and therefore they can charge allocation fees and disbursement fees separately. According to the Article 9 of the communique, loan allocation fees cannot exceed 0.025 %of the allocated loan limits while loan disbursement fees cannot exceed 1% of the granted loan.

Further, the loan disbursement fee can be collected only from cash loans and can be charged only in advance or periodically. Conversely, the disbursement fee for revolving loans can only be collected periodically and cannot exceed 0.025 % of the average loan disbursement balance of the relevant quarter.

In terms of loan allocation fees, as long as the allocated total credit limit does not change or the commercial customer requests to update credit limit, only one credit allocation fee can be collected within the same calendar year. Where the credit limit is increased, a new loan allocation fee can be charged over the additional limit.

In credit limit allocations of less than one year, the maximum allocation fee is calculated by considering the number of months of the limited allocation period.

Collateralisation

Article 10 of the communique regulates fees to be collected for the collateralisation of loans. Fees pertaining to the establishment of pledges, mortgages and expertise transactions regarding movable and immovable assets to be made in the period from the allocation of the loan to the closure of the loan, must not exceed the amount paid by the banks to the third parties. If the service is offered within the bank itself, it must not exceed a reasonable price for the service.

Prepayment fees

Demanding an early payment fee is permitted under the communique if one or more instalments of the loan is made before the due date or if some or all of the debt is paid early. However, banks must make discounts on all interest and other cost elements not accrued according to the amount paid early.

Additionally, if commercial customers request early payment for an entire loan, banks must accept this request. In this case, the early payment fee for Turkish lira loans must not exceed 1% of the amount paid early to the bank for a loan whose remaining maturity does not exceed 24 months and 2% for loans whose remaining maturity exceeds 24 months, which must also be calculated by making discounts pertaining to necessary interest and other cost factors. In foreign currency or foreign currency indexed loans, the said maximum fees are applied with a one-point increment.

Enforcement

Articles 1 to 4 (Purpose, Scope, Foundation and Definitions), 15 (Money and Precious Metal Transfers), 20 (Merchant Fees) and 22 (Adaptation) of the communique entered into force on 1 March 2020 while the Article 11, which regulates prepayment fees, entered into force on 11 March 2020. Other provisions of the communique will enter into force on 1 April 2020.

Further, the communique applies to contracts established before its effective date in terms of transactions to be carried out thereafter.

For further information please contact Neslihan Tuna Saracgil at Selvi & Ertekin by telephone (+90 212 236 12 12) or email ([email protected]). The Selvi & Ertekin website can be accessed at www.selviertekin.com.