Turkey: Turkish Resident Real Persons Cannot Secure Foreign Currency Loans Or Foreign Currency Indexed Loans From Abroad (And Other Recent Amendments To The Legislation On Protecting Turkish Currency)

Last Updated: 4 March 2010
Article by Guner Law Office

Background and introduction

Law No. 1567 on Protection of Turkish Currency (the Law) came into effect on 25 February 1930. The Law vested the Turkish Council of Ministers (the Council) with the authority to set up regulatory measures for protection of the value of Turkish currency. Based on this authority, the Council adopted the Decree No. 32 on Protection of Turkish Currency which came into effect on 11 August 1989 (the Decree). The Law, the Decree and various Communiqués of the Central Bank of Turkey (the Central Bank) set out the fundamental principles on domestic and international exchange of currencies, precious metals, goods and capital in Turkey.

Due to the changes in the Turkish economic climate and varying political approaches, the Council has amended the Decree many times since its promulgation in 1989. The Council's latest amendments effective from 16 June 2009 are significant (the 2009 Amendments). In particular, the Council has made some comprehensive changes to article 17 of the Decree (entitled "Loans"). We summarise some of the key changes to article 17 below:

1 Extension of foreign currency loans by Turkish banks and residents

The 2009 Amendments change the characteristics of the foreign currency loans described in article 17/b of the Decree, and introduce new types of foreign currency loan. Therefore, following the 2009 Amendments:

  1. Turkish Residents (defined broadly as "real persons and legal entities whose legal domicile is in Turkey, including the Turkish citizen employees, self-employed and individual business owners abroad") may extend commodity loans according to applicable import and export regimes.
  2. Turkish banks may extend foreign currency loans of the following types:
  • Foreign currency loans for financing exports, export considered sales and deliveries. Please note the 2009 Amendments have cancelled the 18-month minimum term condition that previously applied to such loans. A circular of the Central Bank dated 22 June 2009 confirms this cancellation but notes the loans shall still be subject to the applicable tax legislation and the banks are responsible for ensuring that their clients are fully told about the tax implications of these loans.
  • Foreign currency loans which are allowed by an investment incentive certificate of a borrower or for financing investment goods.
  • Foreign currency loans which are provided to Turkish entrepreneurs engaged in business abroad, and to Turkish residents that have undertaken works through international or domestic tenders or defence industry projects approved by the Undersecretariat of Defence Industry.
  • Foreign currency loans which are of USD$5 million or more and have an average term of more than one year. Please note the circular notes that Turkish banks can extend these loans to real persons as well as legal entities. Another circular of the Central Bank dated 8 September 2009, allows Turkish banks to extend these loans in multiple tranches. However: (i) the first tranche of the loan must be at least USD$5 million; and (ii) the average term of the loan (taking all tranches into account) must be more than one year.
  • Foreign currency loans which are for commercial or occupational purposes in exchange for certain security. Borrowers may provide foreign currency deposits held in Turkish banks and/or securities issued by or with the surety of the central administration or central bank of a member state of the Organisation for Economic Co-operation and Development as such security. However, the foreign currency loan amount cannot exceed the value of such security. The Central Bank's circular of 22 June 2009 states the relevant security must be secured by pledge or transfer agreement.
  • Foreign currency loans which are permitted or set up by the Ministry associated with the Undersecretariat of Treasury.

Although new types of foreign currency loan are allowed under the 2009 Amendments, one consequence of the 2009 Amendments is that Turkish banks are no longer able to offer real persons foreign currency real property mortgages. This ensures that Turkish banks/borrowers are not exposed to foreign currency risk on the purchase of Turkish real property.

2 Extension of foreign currency indexed loans by Turkish banks to Turkish residents

On 16 June 2009, the Council included a new paragraph (e) in article 17 of the Decree stating that: "Banks may extend foreign currency indexed loans to Turkish residents for commercial or occupational purposes."

According to the Central Bank's circular of 22 June 2009, Turkish resident real persons must provide Turkish banks with:

  • an official statement from the relevant professional organisation stating the relevant real person is engaged in commercial or occupational activities;
  • their tax id number; and
  • a written statement that the loan will be used for commercial or occupational purposes.

This circular also states the banks cannot extend the term of the foreign currency indexed loans that have been already extended to real person Turkish residents before the effective date of amendments to the Decree (i.e. 16 June 2009).

3 Limits on borrowing of foreign currency loans and foreign currency indexed loans by Turkish resident real persons

On 16 June 2009, the Council included a new paragraph (f) to article 17 of the Decree. According to this new provision, real person Turkish residents cannot secure foreign currency loans or foreign currency indexed loans in Turkey or from abroad, other than:

  • foreign currency loans described in article 17/b of the Decree (as detailed in paragraph 1 above); and
  • foreign currency indexed loans described in article 17/e of the Decree (as detailed in paragraph 2 above).

Based on this, Turkish resident real persons will not be able to secure foreign currency loans from abroad, effective 16 June 2009. The reasoning behind this outcome is the foreign currency loan types defined in article 17/b of the Decree can only be extended by Turkish residents.

Conclusion: protection of the Turkish currency and Turkish banks

Therefore, the 2009 Amendments protect the Turkish currency by ensuring that Turkish residents use Turkish banks for any foreign currency loan transactions.

Guner Law Office was established in 1996 and has since grown into one of the major corporate, M&A, banking, litigation, energy and TMT practices in Turkey. Guner Law Office is headed by Ece Guner and works with international law firm Denton Wilde Sapte.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions