21.02.2022/14
About Deposit and Participation System (YUVAM) Accounts of Citizens Residing Abroad
Summary The procedures and principles regarding the conversion of foreign currency deposit accounts and foreign currency participation funds to be opened by non-resident citizens and companies whose legal domicile is abroad and whose qualifications are determined by the Central Bank in return for the foreign currency amounts transferred from foreign banks to banks in Turkey and the foreign currency participation funds to be opened in these banks into Turkish Lira and converted into YUVAM accounts have been determined by the Central Bank Communiqué No. 2022/7 published in the Official Gazette dated 01/02/2022 and numbered 31737. The relevant Implementation Instruction has also been published on the CBRT’s website.
General Provisions for Transition to Yuvam Account
For those who switch to Yuvam account; Yuvam account maturities and additional return rates will be determined by the Central Bank. Yuvam accounts can be opened with maturities of 3 months, 6 months, 9 months, 12 months and 24 months. Accounts with 24-month maturity can be opened with interest dividend payments. Additional returns will be calculated in Turkish Lira and paid in Turkish Lira. The Central Bank rates are as follows and the rates indicated indicate annual rates of return.
- 3 Month Term: 0%
- 6 Month Term: 1%
- 12 Month Term: 1.50%
- 24 Month Term: 2%
Opening a Yuvam Account
The foreign currency deposit account and foreign currency participation fund account balances of those who can open a Yuvam account are converted into Turkish lira at the conversion rate upon request of the account holder and a YUVAM account is opened.
Foreign currency accounts in US dollars, Euros and British pounds sterling are opened at banks in the name of the Central Bank. The foreign currency purchased by the banks for the requests are reported to the Central Bank until 17:00 and transferred to the accounts. Transactions after 17:00 are carried out on the next business day. The Central Bank is authorized to determine the maximum interest rate to be applied by the bank to the YUVAM account.
Expiry Transactions
At the end of maturity, the principal and interest will be paid to the Yuvam Account holder and the participation account balance at the end of maturity will be paid to the Participation Account holder by the bank. The foreign currency buying rate declared by the Central Bank according to the procedures and principles to be determined by the Central Bank will be taken as the maturity rate.
In the event that the end-of-maturity rate determined by the Central Bank is lower than the conversion rate, the principal and interest will be paid to the account holder.
In the event that the end-of-maturity rate determined by the Central Bank is higher than the conversion rate, principal and interest will be paid to the account holder if the interest amount is greater than the exchange rate difference. The participation account balance is paid to the participation account holder.
If the sum of principal and interest is less than the principal and the amount determined by the Central Bank, the difference is paid to the account holder by the bank. It is also paid to the bank by the Central Bank.
If the interest amount is less than the exchange rate difference, the amount calculated by deducting interest or profit share from the amount calculated on the exchange rate difference and the amount of additional return to be provided by the Central Bank shall be paid to the account holder by the Central Bank. In the event that the return to be provided in the participation account is lower than the cost arising from the 1-week repurchase and resale transactions within the scope of the open market transactions of the Central Bank with the participation banks, the participation banks may cover the difference, and the Central Bank shall not make any payment for the unmet part.
In withdrawals made from the accounts before maturity, no additional return amount is paid by the Central Bank.
Exceptions
The provision dated 16.10.2006 and numbered 2006/11188 of the Banking Board Decision dated 16.10.2006 stating that: “Benefits other than interest cannot be provided for deposits and profit share cannot be provided for participation accounts.” and
The provisions of the Communiqué on Interest Rates for Deposits and Loans and Profit and Loss Participation Rates for Participation Accounts: “Banks shall freely determine fixed or variable interest rates to be applied to deposits.” and “Interest rates indexed to foreign currency or precious metals cannot be determined for deposit accounts to be opened in Turkish Lira.” cannot be applied to Turkish Lira deposit and participation accounts to be opened within the scope of this Communiqué.
The relevant Communiqué is available here.
You can also find the relevant application instruction here.
Sincerely,
BİLGENER
