CBRT Increases Mandatory Reserve Ratios for TL Deposits and KKM Accounts

In a move aimed at additional sterilization measures, the Central Bank of the Republic of Turkiye (CBRT) raised the mandatory reserve ratios for TL deposits and Exchange Rate Protected Deposits (KKM).

As the CBRT maintained the policy rate at 50%, it implemented a mandatory reserve adjustment to bolster the monetary transmission mechanism and enhance sterilization efforts.

The mandatory reserve ratio for short-term TL deposits was hiked from 8% to 12%, while for long-term deposits, it surged from zero to 8%, as stated in the CBRT’s announcement.

Furthermore, the mandatory reserve ratio for short-term KKM was raised from 25% to 33%, and for long-term KKM, it was increased from 10% to 22%. These adjustments, effective from May 24, aim to reinforce financial stability.

In addition to these changes, the CBRT introduced alterations in mandatory reserve interest and commission applications. The target for transitioning KKM to TL was upheld, while the total target, including renewals, was reduced to 75%.

Corporate KKM and individual and corporate YUVAM accounts were excluded from the total target calculation, starting from the next calculation period. If the total target is achieved, the interest rate applied to mandatory reserves for KKM will be reduced to 40% of the policy interest rate.

Moreover, a monthly growth cap of 2% was imposed on foreign currency loans. Loans exceeding this limit will result in mandatory reserves in Turkish lira equivalent to the excess amount being blocked for one year. These measures are designed to ensure prudent lending practices and maintain financial stability in the banking sector.

Source: Bloomberght / Prepared by Irem Yildiz

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