BRSA Publishes a New Decision on Credit Limitation
The Banking Regulation and Supervision Agency (BDDK) issued Decision No. 10250 on June 24, 2022, introducing certain restrictions on credit usage for companies subjected to independent audits. This topic was explained in our Circular No. 42, dated June 27, 2022.
On July 7, 2022, the BDDK published Decision No. 10265, which brought new clarifications and regulations regarding the application.
The key points of the new BDDK Decision are summarized below:
– To determine whether a company subjected to independent audit is subject to credit limitations, the most recent financial statements (including interim tax periods), prepared in accordance with the Tax Procedure Law (VUK) and related regulations, and submitted to the tax office will be considered.
– Foreign currency (foreign exchange) assets, gold, foreign currency deposits, foreign currency-denominated securities/stocks issued by domestic and foreign residents (except for Eurobonds issued by the Republic of Turkey), foreign currency or gold-tracking exchange-traded funds (ETFs), foreign currency reverse repo transactions with foreign residents, and foreign currency (including gold) spot assets provided to banks to acquire Turkish Lira will be included in the calculations.
– For companies required to prepare consolidated financial statements, the most recent consolidated financial statements approved by independent audit firms will be considered.
– For companies required to prepare consolidated financial statements, it is specified that the assessment will be made excluding foreign subsidiaries and affiliates.
– In the calculation of liquid foreign currency assets of consolidated companies, the liquid foreign currency assets of the company’s domestic affiliates and subsidiaries, excluding banks and financial institutions, will also be included in the calculation.
– If it is determined that a company, based on its consolidated financial statements, is not eligible to use Turkish Lira credit under this Decision, the credit restriction will only apply to the parent company. For credits granted to the parent company’s affiliates and subsidiaries, the provisions of this Decision will be applied separately to each affiliate and subsidiary, and it will be determined whether credit limitations apply.
– Companies that are not eligible for foreign currency credit will be able to apply for Turkish Lira commercial credit up to the net position deficit declared for the period of their application within three months. The accuracy of the foreign currency position declaration will be verified by a sworn financial advisor (YMM) and submitted to the bank with documentation.
– Companies that will begin independent audit obligations for the first time at the end of 2022 will be exempt from this Decision.
– Companies eligible to use Turkish Lira commercial credit under this Decision must have their declarations and commitments verified by independent audit firms or sworn financial advisors (YMM), according to the procedures and principles outlined in the Decision. This verification must be submitted to the bank by the end of the last business day of the three-month period following June 30, 2022.
You can access the relevant BDDK Decision here.
Best regards,
BİLGENER
