"We Are Preparing a Legal Regulation to Accelerate the Development of Participation Finance Sector"

President Recep Tayyip Erdoğan announced the new Economic Reform Package. Erdoğan stated that the package aims to grow the economy on the basis of the investment, production, employment, and exports. "We have been preparing this program since November last year. The main target of our package is to grow the economy on the basis of the investment."

Expressing their aim for a domestic and national economy with the Economic Reform, Erdoğan listed the measures taken for the financial sector. "We are preparing a uniform legal regulation to accelerate the development of the participation finance sector. We will unite the participation finance sector under one roof and implement a central advisory board for the sector."

What financial sector steps are included in the Economic Reform package?

• We are taking certain measures to eliminate the delayed negative impacts of the pandemic and further improve the asset quality of the banking sector. The most important of them will be to correctly direct the companies that have a chance to survive even with their non-performing loans.
• We encourage the establishment of operational restructuring and company rehabilitation functions in the banking sector for the companies to survive.
• We are creating a legislative infrastructure to establish Venture Capital Funds for non-performing loans.
• We make the exception of the stamp, fee, and resource utilisation support fund deduction applied to asset management companies for an indefinite period to help them operate in a competitive and corporate structure. This way, we will ensure faster, flexible, and low-cost solutions for debtors.
• We are preparing a uniform legal regulation to accelerate the development of the participation finance sector. We will unite the participation finance sector under one roof and implement a central advisory board for the sector.
• We are establishing a mechanism to fortify participation finance at international standards.
• We are also taking a series of steps to improve the institutional infrastructure of the financial sector. We are restructuring the Risk Centre, where all credit and risk data of our country are collected.
• We take TROY, our brand in card payment systems, under a separate company roof.
• We will achieve more transparent relations between banks and their customers by establishing a surveillance mechanism that will protect the consumer.
• We facilitate the public offering processes by encouraging companies to meet their financing needs with equity.
• We are completing regulations on the Project Finance Fund and Project-Based Securities to increase product diversity in the capital markets. We will make sure that projects in the areas of infrastructure, transportation, energy, communication, and healthcare will be financed by capital markets.
• We diversify the financing opportunities of environmentally conscious investments.
• We encourage issuances in the green bond market, which is in high demand in international financial markets, by creating a proper infrastructure. Investments towards renewable energy, clean drinking water, electric, or hybrid transportation vehicles that reduce carbon emissions can be financed with such issuances.
• We are establishing the Bond Guarantee Fund to encourage our real sector companies to issue bonds.
• We are expanding the individual retirement system to a much wider audience. We are removing the obstacles for children under the age of 18, who constitute 25% of our population, to enter the system.
• We allow the transfer of retirement savings in organisations such as funds, foundations, and associations to the individual pension system until the end of 2023.