Bloomberg/Miguel Angel Sanchez
Under the new arrangement, required reserves are effectively an insurance against bank liabilities—such as deposits and participation funds.
Tuesday 20, August 2019 BY KUDAKWASHE MUZORIWA
The Central Bank of the Republic of Turkey (CBRT) has changed the ratio of and the remuneration applied to required reserves.
In a statement, CBRT, said, “The reserve requirement ratios for Turkish lira liabilities and the remuneration rates for Turkish lira-denominated required reserves are linked to the annual growth rates of the total of banks’ Turkish lira-denominated standardised cash loans and cash loans under close monitoring, excluding foreign currency-indexed loans and loans extended to banks.”
Required reserves for banks whose loan growth is between 10 per cent and 20 per cent will be set at two per cent, while the reserve requirement ratios for other banks will be left unchanged.
The ratios are currently at seven per cent for deposits of up to three months, four per cent for six months and two per cent for up to one year.
Additionally, the current remuneration rate of 13 per cent applied to Turkish lira-denominated required reserves, is set at 15 per cent for banks with a loan growth between the reference values and at five per cent to others.
Turkey seeks to turn the rules into an incentive to get credit flowing again.