BRSA loosens lending: Additional restrictions lifted

The Banking Regulation and Supervision Agency (BRSA) removed the additional risk weights applied to personal loans and housing loans in the capital adequacy calculation of banks. In the statement made by the BRSA, the following statements were used: "As it is known, within the scope of the coordinated macroprudential measures taken to ensure confidence and stability in financial markets and the effective functioning of the credit system, more prudent risk weights were applied to personal loans and housing loans in the capital adequacy calculations of banks compared to international minimum standards. As a result of the assessments made, in the calculations of capital adequacy standard ratios in accordance with the Regulation on Measurement and Assessment of Capital Adequacy of Banks (Regulation) with the Board Decision dated 19/9/2024 and numbered 10964; - Personal loans, - Personal credit cards, - Vehicle loans for the acquisition of passenger cars and vehicle collateralized loans and financial leasing transactions to be made, - The consumer itself, The Board Decision dated 31/7/2023 and numbered 10630 and the Board Decision dated 24/8/2023 and numbered 10655, which determined more prudent risk weights for loans collateralized by mortgages on residential real estate provided to these persons for the purpose of home acquisition in case they have at least one residence owned by their spouse or children under the age of 18, were repealed and it was decided to apply the risk weights determined in the Regulation to these loans."

What was decided before?

With the regulation it made on July 31, 2023, the BRSA had decided to increase the risk weights taken into account in the calculation of capital adequacy standard ratios in terms of general purpose loans, personal credit cards, vehicle loans and vehicle collateralized loans and financial leasing transactions with consumers. In the event that the standard approach was used in these transactions, banks' risk weights were applied at 150 percent, which led to an increase in loan interest rates and thus an application aimed at limiting the demand as well as the supply of loans. It also limited domestic demand.

Which rates will be applied?

With the latest decision, the BRSA returned to the rates previously used in this regulation. Before the regulation, the risk weights were 100 percent for credit cards with maturities of 1-6 months and 150 percent for maturities longer than 6 months, 100 percent for general purpose loans with maturities of 1-12 months and 150 percent for maturities longer than 12 months, while the risk weight for vehicle loans was 75 percent.