Decision on the Amendment of the Regulation on the Principles Regarding the Establishment and Operation of Savings Finance Companies Has Been Published

The “Decision on The Amendment of the Regulation on the Principles Regarding the Establishment and Operation of Savings Finance Companies” (“Regulation”), which governs the capital requirements for branch openings, appointment of senior executives, contract practices, customer rights, fund usage and distribution, financing limits, collaterals, and real estate acquisition of savings finance companies, has been published in the Official Gazette dated 30.05.2025 and numbered 32915.

Capital Requirement for Branch Openings Have Been Amended

Pursuant to the Regulation, the financial adequacy criterion required for savings financing companies to open branches has been redefined.

Accordingly, in order for savings financing companies to obtain permission to open a branch, they must have equity capital of ten million Turkish Liras for each individual branch.

Within this framework, real estate revaluation differences shall not be taken into account in the calculation of equity capital. Furthermore, the aforementioned amount shall be adjusted annually as of the beginning of each calendar year in accordance with the revaluation rate determined under Repeating Article 298 of the Tax Procedure Law No. 213.

Notification and Appointment Periods Regarding the Resignation of Members of the Management Body and Senior Executives Have Been Amended

Pursuant to the Regulation, the procedures and deadlines applicable in the event of the resignation of board members, general managers, and deputy general managers in savings financing companies have been redefined.

In this context, in the event that any of the aforementioned individuals resign from their positions for any reason, the relevant savings financing company is obliged to notify the Banking Regulation and Supervision Agency in writing of the reason for resignation within fifteen days from the date of resignation.

Furthermore, a permanent appointment must be made to fill the vacated position within three months at the latest. The Banking Regulation and Supervision Board (“Board”) is authorized to extend this period up to twice its length.

Qualification Requirements for Board Members Have Been Expanded and Minimum Deputy General Manager Appointment Obligation Has Been Introduced

The Regulation introduces new governance requirements with the aim of strengthening the corporate structure and enhancing the administrative capacity of savings financing companies.

Within this scope, it has been stipulated that the professional experience and educational qualifications—along with financial competence, shareholding, and criminal record requirements—previously prescribed under the Financial Leasing, Factoring, Financing and Savings Financing Companies Law No. 6361 for the general manager position shall also be required for the majority of the members of the board of directors.

Furthermore, each savings financing company is now mandated to appoint at least three deputy general managers, each responsible for the areas of treasury/finance, sales, and operations.

Prohibition on Non-Contractual Payments and Housing Finance to Legal Entities Has Been Introduced

The amendments introduced by the Regulation impose significant restrictions on the scope and implementation procedures of savings financing agreements.

Accordingly, the execution of savings financing agreements for housing finance with legal entity customers has been explicitly prohibited. This amendment clearly stipulates that housing finance may only be extended to natural persons.

In addition, a newly added provision to the Regulation prohibits companies from accepting payments—under any title—without the execution of a savings financing agreement. Within this framework, companies are not permitted to collect any payments or receive any prepayments prior to the signing of a formal agreement.

New Regulations Introduced Regarding Customer Rights

With the Regulation, it has been explicitly stipulated that savings financing agreements shall not contain any provisions that are misleading to the customer or that restrict or hinder their rights arising from the legislation. Furthermore, companies are strictly prohibited from offering any gifts, promotions, benefits, gift vouchers, or similar incentive practices from either the savings fund pool or their own resources for the purpose of acquiring new customers. Similarly, providing any direct or indirect benefit to third parties for customer referrals or similar reasons is categorically forbidden.

Another amendment concerning customer rights relates to the refund period. In the event of contract termination by the customer, the payment of the collected amount to the seller must be made in cash within a maximum of ten business days based on the date stipulated in the contract. This period may be amended by a decision of the Board.

Additionally, customers may submit their requests to increase or decrease the contract amount either in writing or through remote communication tools. Companies are required to fulfill such requests within no later than fifteen business days. Apart from the organization fee and tax difference corresponding to the increased portion, no additional charge may be demanded from the customer due to an increase in the contract amount.

Lastly, it has been regulated that only the accumulated savings amount and the paid organization fee may be transferred from one contract to another, thereby providing clarity regarding contract transfer procedures.

New Regulations Introduced on High-Value Contracts and Allocation Conditions

The Regulation introduces detailed thresholds for high-value contracts and imposes significant restrictions on allocation conditions.

Accordingly:

• High-value contracts have been specifically defined based on the subject of financing:

o Contracts exceeding TRY 5 million for residential properties and roofed workplaces, and

o Contracts exceeding TRY 2 million for vehicles shall fall under this category.

The aggregate value of such contracts may not exceed 15% of the company’s total contract value as of the relevant date and may not be included in lot-based contracts (çekilişli sözleşmeler).

It has also been stipulated that lot-based contracts may not be executed with legal entity customers, and that contracts concluded with legal entities may not exceed 5% of the company’s total contract volume. This ratio may be increased up to twice the limit by a resolution of the Board.

Furthermore, in order for an allocation to be made, it has been made compulsory that:

• At least 40% of the contract amount must be paid as savings by the customer, and

• At least 40% of the contract term must have elapsed.

For lot-based contracts, the same 40% savings and duration requirements shall apply to customers who have not yet been selected in the draw. However, for customers who have made a down payment, the 40% duration condition may be proportionally reduced based on the down payment amount, provided that at least 150 days have passed and five installments have been made. This easing applies only to individual contracts, and down payments shall not be considered in lot-based contracts for this purpose.

In addition, down payments may be collected only together with the first installment; interim payments cannot be used to bring forward the allocation schedule.

Additional restrictions applicable to lot-based contracts are as follows:

• Customers may not receive an allocation before 150 days have elapsed and five installments have been paid from the date they join the draw group.

• Each installment paid until the allocation date must not be less than the pro rata amount of the contract amount divided by the total term.

• Except for payments to customers who have not yet been selected in the draw, only one customer may receive an allocation per group within a calendar month.

The Board shall be authorized to amend the percentages, limits, or calculation methods set forth in this Article, and to introduce separate regulations specific to goods, services, or customer groups, where deemed necessary.

Financing Limits Relaxed, Collateral Requirements Strengthened, and Emphasis on Participation Finance Have Been Introduced

The amendments introduce significant changes regarding financing capacity, collateralization obligations, and financial structure in savings finance companies.

Under the previous regulation, the total amount of financing that a savings finance company could provide was limited to 75% of the sum of its savings fund pool and equity. With the Regulation, this limit has been increased to 200%. Additionally, it has been stipulated that the ratio of the company’s equity to the total contract amount must be at least 3%, and that this ratio must be maintained continuously.

In the same vein, under the former regulation, real estate pledged as collateral in housing and roofed workplace contracts was required to be appraised by valuation institutions licensed by the Board and in accordance with banking legislation. While the requirement for such valuation remains in force under the amended Regulation, it is now additionally mandatory to establish a mortgage or pledge in favor of the company over the asset subject to financing within the scope of the allocated contract.

Sanctions Introduced for Improper Use of Funds, Managerial Qualifications Enhanced, and Emphasis on Participation Finance Reinforced

The amendments tighten the principles governing the management of the savings fund pool, introduce a new prohibition on contract execution in the event of improper fund use, impose professional competency requirements for fund managers, and adopt terminology aligned with Islamic finance principles.

Under the previous regulation, savings finance companies were merely required to comply with Article 29 of the Regulation when managing funds, and no sanctions were stipulated in the event of non-compliance. With the new Regulation, if funds are not managed in accordance with Article 29, if fund accounts are not segregated from other company accounts, or if funds are used for purposes other than intended, a prohibition on entering into new contracts shall be imposed on the relevant savings finance company for a minimum period of one month.

Additionally, new qualification requirements have been introduced for individuals managing the savings fund pool. In this regard, the savings fund pool must be managed by a deputy general manager who:

• Holds at least a bachelor's degree, and

• Has a minimum of five years of experience in treasury operations within the banking sector.

Real Estate Restrictions Tightened and Non-Core Acquisitions Prohibited

Under the previous regulation, the net book value of real estate holdings of savings finance companies could not exceed 50% of their shareholders’ equity. The recent amendment has reduced this threshold to 25%.

Furthermore, the Regulation stipulates that savings finance companies may acquire real estate only under the following two circumstances:

• For the purpose of conducting core business activities (e.g., service buildings),

• Properties acquired as a result of receivables.

All other forms of real estate acquisition have been explicitly prohibited.

Strengthening of the Reserve Fund and Clarification of Participation Finance Principles

With the amendments, the reserve fund ratio within the savings fund pool has been increased to enhance companies’ liquidity security, while an emphasis on compliance with participation finance principles has been introduced regarding investment instruments.

Previously, savings finance companies were required to allocate at least 3% of the total savings fund pool as a reserve fund. The Board was authorized to reduce this ratio down to 1% or increase it up to 6%.

Under the current Regulation, the reserve fund ratio has been raised to 5%. It is further stipulated that the Board may now reduce this ratio to as low as 3% or increase it up to 10%.

Introduction of New Staffing Requirement and Real Estate Compliance Period

With the addition of temporary articles to the Regulation, transition periods have been defined to ensure compliance with the new provisions.

Within this scope:

• The appointment of a deputy general manager with at least a bachelor’s degree and a minimum of 5 years’ experience in treasury operations to manage the savings fund pool must be made within three months from the effective date of the Regulation.

• Pursuant to Article 24, Paragraph 4 of the Regulation, the acquisition of real estate by companies that is unrelated to core activities or not arising from receivables was prohibited. While this prohibition applies to new acquisitions, any real estate currently held in violation of this rule must be disposed of within a maximum period of two years.

Effective Date

The Regulation will come into effect on 30.05.2025, the date of its publication.