Turkey's central bank unveiled new measures on Saturday meant to address credit availability including higher reserve requirement collateral for lenders, days after it shocked markets with a 100 basis-point interest rate cut to 13%.
It said the steps were meant to support financial stability and strengthen the monetary transmission mechanism after citing the need to address the widening gap between its policy rate and lending rates when it cut rates on Thursday.
The central bank replaced an existing 20% reserve requirement ratio for credits with a higher 30% treasury bond collateral requirement.
Turkish authorities including the central bank and BDDK banking regulator have previously taken steps to limit loans to companies except those that are net exporters, as part of an economic plan that seeks to flip the big current account deficit to a surplus.
Last month, business groups complained over regulations and said manufacturing firms are not able to access financing with low rates.
As part of the central bank's new measures, the banks need to keep 20% in securities for commercial loans extended with an interest rate over 1.4 times the current reference rate of 16.32%. The lenders need to maintain 90% bond collateral if a commercial loan extended will have an interest rate more than 1.8 times the reference rate.
Timothy Ash at Blue Bay Asset Management said the new central bank rules to lower banks' lending rates makes banking very complicated.
"(It) will increase overheating concerns, boost inflation and put more downward pressure on the lira," Ash said on Twitter.
The central bank also said that the banks need to maintain, in securities, the amount equal to loans that exceed the 10% loan growth rate level when compared to the end-2022 for a year.
