The Regulation on the Procedures and Principles Regarding the Funds to Be Obtained by Development and Investment Banks from Their Credit Customers, Affiliates, and Shareholders ("Regulation") was published in the Official Gazette dated April 9, 2025, and entered into force.
This Regulation sets out the procedures and principles regarding the funds to be obtained by banks from their credit customers, affiliates, and shareholders, and stipulates that banks must align their practices with the provisions of the Regulation by April 1, 2026.
Funds to be obtained by banks from money markets, capital markets, and organized markets are excluded from the scope of this Regulation.
A New Era in Fund Procurement from Credit Customers
The regulation on funds to be obtained from credit customers introduces significant limitations and responsibilities for development and investment banks in their fund procurement processes with their own clients. In this context, fund procurement may only be carried out based on a fund agreement signed between the parties, which must be in written form or deemed valid through remote communication (electronic methods).
These agreements may also be executed through electronic means that ensure the verification of the customer's identity; in other words, not only traditional physical signatures but also remotely signed contracts in digital environments will be considered valid.
The most significant restriction introduced by the Regulation is that the amount of funds that can be obtained from a customer may not exceed that customer's total credit risk exposure with the bank. In other words, the amount of funds received from a customer cannot surpass their total credit risk. This total credit risk includes not only cash loans but also non-cash credit exposures such as letters of guarantee, sureties, counter-guarantees, avals, and endorsements. In summary, all types of transactions falling under the definition of a credit customer will be assessed within the credit limit determined by the bank. This risk amount also includes individual credit card limit commitments; however, only 20% of unused limit commitments are taken into account. This approach aims to directly link banks' fund-raising activities to the customer's current level of indebtedness, thereby limiting fund movements that exceed the customer's credit risk.
Another important point is the requirement that the person bearing the credit risk must be the same as the person providing the funds. This aims to prevent indirect intra-group fund transfers or risk shifting.
Limitations on Funds Provided by Shareholders
Funds obtained from shareholders, subsidiaries, affiliates, and jointly controlled partnerships are only permitted if based on a formal fund agreement. In this way, financial relationships established with such entities must be documented and made traceable. The amount of funds a shareholder can provide may not exceed the portion of the bank's equity corresponding to their shareholding in the bank's capital. However, qualified shareholders, risk groups to which these shareholders belong, and shareholders with direct or indirect public legal entity status are exempt from this limitation. Shareholders who have acquired shares through the stock exchange but do not qualify as qualified shareholders, meaning those without any influence over management control, are not considered eligible fund providers under this framework.
Provisions on the Monitoring and Compliance Processes of Funds
In order to ensure proper monitoring of funds obtained by development and investment banks from their credit customers, affiliates, and shareholders, it is mandatory that such funds be tracked in separate accounts based on their types. Within this framework, funds must be recorded under credit customer funds, affiliate funds, and shareholder funds accounts, according to their nature. Banks are obligated to establish the necessary control and monitoring mechanisms and to integrate these into their operational processes to ensure compliance with the limitations and rules set out in this Regulation. If these practices are deemed inadequate, the deficiencies must be remedied within the timeframe determined by the Banking Regulation and Supervision Agency ("Agency").
In cases where funds initially obtained in compliance with the legislation later become non-compliant, necessary measures such as the liquidation of fund-related accounts may be implemented. The Agency may, at its discretion, grant banks a period of time to complete these actions. In order to determine the steps to be taken in such cases in advance, it is mandatory that fund agreements explicitly include provisions on how non-compliance issues will be resolved.
Limitation on Intermediation Revenues
Development and investment banks acting as intermediaries in payment, fund transfer, and collection transactions are required to track the fees, service charges, or commissions they collect in temporary accounts appropriate to the nature of the transaction, without generating any return on these amounts. Such funds may not be used in instruments such as time or demand deposits, participation funds, or other fund accounts permitted under the Regulation.
Provisions on Loan Collateral
Cash collaterals held as security for loans extended by development and investment banks will not be considered as funds obtained from credit customers under the Regulation, provided that certain conditions are met. In this context, it is required that the specific loan to which the collateral relates be clearly identified, that the collateral be secured through a pledge or assignment agreement in a way that prevents any disposal throughout the loan term, and that the collateral amount be proportionate to the interest, profit share, and commissions related to the loan.
Following the termination of the loan relationship, the collateral amount must be promptly liquidated either by offsetting it against the loan debt or by returning it directly to the relevant party, thus concluding the process.
Compliance Process
Development and investment banks are required to comply with this Regulation by April 1, 2026. The Agency may extend this period by one year.
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.
