Turkey set to restructure consumer loans

Turkey’s banking regulator prepared changes to regulations to restructure non-performing consumer loans.

The personal finance loans, which consumers typically acquire for their cash needs and to buy items excluding housing and cars, may be restructured over as many as 60 months, according to the draft measure published on the Banking Regulation and Supervision Agency’s (BDDK) website on Thursday.

Turkish authorities are seeking ways to help indebted consumers and businesses after a currency crisis swept through financial markets last year, pushing interest rates to the highest levels in 15 years, slashing spending power and sending the economy into contraction.

The loans, known as “ihtiyac kredileri” in Turkish, total 204.8 billion liras ($39 billion), or 51 percent of total lira-denominated consumer loans in Turkey, according to data provided by the regulator. Of that amount, 10.48 billion liras are non-performing, the figures for December showed.

The government has also slashed taxes on items such as washing machines, refrigerators, holidays and cars in order to stimulate an economic revival. The measures, due to expire at the end of the first quarter, come ahead of local elections on March 31.

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