New Regulation for the Turkish Banking Industry: Towards a Healthy Synthesis Between the Banks and the Customers
Turkish banking industry is considered one of the strongest in Europe. The crisis ridden global banking industry had experienced numerous difficulties following the 2008 market collapse, but Turkish banking industry had survived the crisis with relatively insignificant scars. The industry emerged as the only banking industry among the OECD countries that did not ask for public financial assistance from the authorities. The main reason behind the resilience of the Turkish banking industry is its well-regulated nature. The changes adopted in the Banking regulation following the 2002 economic crisis n Turkey had imposed such measures for the Turkish banks that the industry's much criticized landing practices had been transformed. Moreover, its financial capacity had been pretty much improved. Turkish banking industry does not only meet much of the criteria imposed by Basel II but also satisfies quite an important part of the Basel III regulations in a global banking environment where many of the substantial banking industries across Europe cannot.
The proven strength of the Turkish banking industry had also led to the foreign capital to be invested in to the Turkish banking industry. Well known global giants had started to open up branches and, in some cases, sought for acquisitions in Turkey throughout the last decade. What made the Turkish banking industry so appealing alongside the regulatory strength for such foreign investors was the lucrative business of charges that the banks take from their customers. Such charges are usually not related with traditional core banking services nonetheless they have been increasingly resorted by the banks to foment higher revenues. Even though such non-banking related charges mean higher profits for the industry increasing complains on the part of the customers have recently been more and more apparent. Hence the authorities finally intervened to make a new regulation to address the issue.
The new draft regulation proposes to reduce the number of commissions and charges that amount to dozens to 20. For all the products and services, the banks will have to get the approval of the customers in advance. For any kind of increases that exceeds 20% the consumer will have to be informed by the banks. The new draft also includes new arrangements for the credit landing commissions that are increasingly expressed as a complaint by the consumers. By the new regulation the banks will not impose any charges except credit landing charge. The charges like information gathering charge, credit proceeding invoice charge, payment schedule change charge and flexible payment schedule charge will not be issued to the consumers. The credit landing charge will not exceed 0.005% of the landed amount. The new draft also addresses one of the biggest complaints aired by the consumers who seek to purchase houses through mortgages in which no extra charges regarding the house expertise will be requested by the banks except the amount paid to the third parties. Another arrangement envisaged in the draft regulation is the clause that prevents any charges to be claimed from the consumers except the ones already paid to the official state bodies in case of credit request decline.
Turkish banking system is one of the best regulated banking industries in the world. Such regulations undoubtedly strengthen the banking industry. The increasing economic might of the country and the expanding capacity of the Turkish consumers which manifest itself in rising purchasing power levels had combined to create a lucrative business environment for the banking industry. The influx of foreign capital in to the Turkish banking industry both in the form of new branches and mergers and acquisitions attest to this development. However, the increasing demands of the consumers should be addressed by the authorities regarding the ever-growing list of charges imposed on the consumers. The latest draft regulation by cutting down many of the notorious charges that the banks impose will have the positive effects on the consumers and will shift the focus of the banks from non-banking profits to the profits and activities that are related with core traditional banking activities. Such a change towards core banking activities in the banking sector will benefit both the consumers and the national economy as well.