Turkish central bank changes reserve requirement to channel loans to productive sectors

[ISTANBUL] The Turkish central bank said on Saturday it was changing reserve requirement regulations to help channel loans towards productive and production-oriented sectors to support sustainable growth.

"In view of the likely impacts of the recent surge in consumer loans on growth composition, inflation, current account balance and risk premium... the central bank decided to introduce some changes," central bank said in a statement.

The loan growth calculation for Turkish banks who will benefit from reserve requirement incentives will include loans extended to selected sectors, the bank said.

The central bank said the sectors included agriculture, forestry, fishing, mining, manufacturing, transportation, accommodation services, information and communication among others.

"The new practice will help channel loan supply towards productive and production-oriented sectors that will support sustainable growth, rather than consumption, affect the current account balance positively and support financial stability," the bank said.

In this week's investor meetings, the central bank signalled the change as participants had the impression that the central bank might soon use macroprudential tools to put a brake on rising consumer loan supply.

REUTERS