1. INTRODUCTION

With its decision dated June 24, 2022 and numbered 10250 ("RestrictionDecision"), the Banking Regulation and Supervisory Agency ("BRSA") had introduced restrictions on the Turkish Lira (“TRY”) borrowings of the companies that are subject to independent audit ("Companies") other than banks and financial institutions. Following the Restriction Decision, BRSA's decision dated July 7, 2022 and numbered 10265 (“Decision”) clarified the restrictions imposed in the Restriction Decision for effective implementation.

With its new decision dated October 21, 2022 and numbered 10389 (“New Decision”), the BRSA had tightened the restrictions imposed by the Restriction Decision and the Decision.

  1. SIGNIFICANT PROVISIONS IN THE NEW DECISION

According to the Decision, the Companies were exempted from the restriction on TRY cash commercial loans, if they (i) get their foreign currency assets (“FX Assets”) and total assets and net sales revenue of the last 1 (one) year in the most recent financial statements determined by an independent audit institution; (ii) declare and undertake that the TRY equivalent of the FX Assets will not exceed TRY 15,000,000 during the term of the loan and even if it exceeds the amount of TRY 15,000,000, it will not exceed 10% of its total assets or its sales revenue for the last 1 (one) year, whichever is greater; and (iii) submit to the bank, the current value of their FX Assets, total assets and net sales revenue for the last 12 (twelve) months in the balance sheet of the previous month within the first 10 (ten) business days of each month.

With the New Decision, it is now decided that the above-mentioned threshold of TRY 15,000,000 will be applied as TRY 10,000,000 and threshold of 10% will be applied as 5%. These thresholds in the New Decision will be applicable as of November 1, 2022.

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.