Turkey fines banks for breaking interest rate rules, failing to restructure debt

Turkey’s banking regulator has levied fines on banks totalling 330 million liras ($48 million) since the outbreak of COVID-19 for using banned interest rate calculations and refusing to restructure debts.

The financial penalties have come in four waves since mid-May and affected more than 20 banks and financial institutions, the Daily Sabah newspaper said on Monday.

Acting on customer complaints, the watchdog found some banks had raised interest rates above market levels and increased effective interest rates through calculations that broke banking regulations, according to unidentified officials from the regulator.

The Turkish authorities have instructed banks to boost lending and award moratoriums on debt repayments this year to help the country cope with the financial fallout of the coronavirus pandemic. The government has also pressured banks to lower interest rates and used state-run banks to offer cheap lines of credit and help with restructuring debt.

Banks were also fined because they failed to show flexibility to indebted customers who lost their jobs or who suffered large financial losses since COVID-19 struck in mid-March, Daily Sabah said.

Some institutions also introduced additional costs for taking out loans and created more obstacles for customers who wanted to borrow money, the newspaper said.