Amendment to the Regulation on the Procedures and Principles Regarding the Classification of Loans and Provisions to be Set Aside for Them
“The Regulation on the Amendment to the Regulation on the Procedures and Principles Regarding the Classification of Loans and Provisions to be Set Aside for Them” (“Amending Regulation”) by the Banking Regulation and Supervision Agency has entered into force through publication in the Official Gazette dated 06.07.2021 and numbered 31533. With the said Regulation certain paragraphs have been added to the Regulation on the Procedures and Principles Regarding the Classification of Loans and Provisions to be Set Aside for Them (“Regulation”). The relevant amendments are as follows:
- Pursuant to the Amending Regulation, it has been regulated that the banks shall establish a written criterion for class change of non-performing loans and keep them available for auditing.
- With the Amending Regulation, prior to deciding to debt restructuring, bank’s evaluation regarding the debtor’s capacity for repayment is introduced as process. It is regulated that if the evaluation result is considered to be convenient, the debtors will be included within the scope of restructuring.
- The scope of regulation on assets acquired by banks due to their receivables has been expanded. With the Amending Regulation, partnership shares and other assets were also included in the scope regarding the requirements on: (i) accounting (ii) divestment within three years (iii) recording the lower amount between the amount calculated as a deduction for the loan debt and sale costs deducted fair value.
- Additionally, with the Amending Regulation, Banking Regulation and Supervision Board is authorized to amend the three years period on the divestment of the assets that are acquired by the banks due to their receivables.
Please find the Turkish version of the relevant Regulation here.
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