Turkey increases independent oversight of larger business loans
Turkey increased independent supervision of larger loans to businesses as the amount of bad loans in the banking system continued to rise.
Businesses operating outside of the financial sector will be required to submit independent evaluations of borrowing of more than 100 million liras ($90 million), the banking watchdog said in a ruling published in Turkey’s Official Gazette on Friday. Firms were previously required to submit the reports for loans exceeding 500 million liras.
Turkish banks have been saddled with tens of billions of dollars of bad debt and restructured loans after a currency crisis swept through the economy last year. The government has already imposed curbs on borrowing in foreign currency to try to limit risks for the banking system.
Investors and economists are calling on Turkey to implement a plan to take bad loans off banks’ balance sheets. But the proposals have been held up partly by disagreements between banks and investors on what constitutes a bad loan and the price at which the loans should be sold for. The government has also said it is the responsibility of banks, not the state, to implement the measures.