Law no. 7292 which aimed to amend particularly "Financial Leasing, Factoring and Financing Companies Law no: 6361", was published in Official Gazette no. 31416 on 7th March 2021. This Law which basically takes "saving finance companies1" within the scope of the Law no. 6361 and imposes obligations on all financial institutions. Therefore, in the forthcoming months, Turkey will bear witness to this adaptation process.

The main importance of this Law is that savings finance companies have been taken within the context of the Law no. 6361. Accordingly, savings finance companies are subject to supervision of Banking Regulation and Supervision Agency ("BRSA"). Additionally, savings finance companies are regularized, restricted, and banned from doing several activities including using "participation" term, lending third parties, giving the impression of a bank. Moreover, a savings finance contract is defined and minimum clauses (like right of withdrawal, right to terminate, organization price, fixed date, amount) in a savings finance contract are determined by this Law. Also, the scope of savings finance companies' activities is restricted with only finance of a car and a house.  Saving finance companies also must separate the pool of funds from other savings as well. Further, cancellation of the official authorization procedure is specifically determined for savings finance companies.

New administrative fines and crimes are also involved in the changes for providing the security of clients. In this context, in the case that the company's activities are non-compliance with interest-free financing, right of withdrawal, right to terminate and so on, savings finance companies will be fined. Besides, malversate is regulated as a specific crime in this Law.

With this amendment, all financial institutions including savings financial companies are obliged to follow certain changes. For instance, the paid-in capital condition increased to 50 million Turkish Lira for Factoring, Leasing, and Financing Companies. For savings finance companies, the paid-in capital condition is determined as 100 million Turkish Lira. Plus, for all financial institutions, the rule of minimum shareholder number got canceled by this amendment. Accordingly, financial institutions can be established only by even one shareholder. Besides, article 15 entitled "Protective Regulations" has been changed and elaborated. The sub-article no. 4, which is added in article 15, diversifies the conditions for ("BRSA") to take certain measures.

After this Law entered into effect, savings finance companies will apply to BRSA in a month (until 7 April 2021) and submit a plan, which shows either how the transition process will be or submit for the liquidation process of the company in 6 months. For this reason, BRSA issued a guide for savings finance companies to fulfill their obligations.  This guide demonstrates until when and how savings finance companies should apply to BRSA.

We believe, as a result of this Law, the financial sector will be stronger with its new players under the regulation of BRSA and the effects of the regulation will have a positive outcome even in the short term. We expect to see many of the small companies, which incorporated before this regulation will either merge with the bigger players or within themselves to comply with the Law.


1 Savings Finance Company is a financial company model which collects money by a certain date and in exchange for this money, the company by the savings finance contract enters into an obligation of transfer of the title of certain house or car.

Originally Published by Gungor Law Firm, March 2021

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