Savings Finance Companies Have Recently Been Introduced to the Turkish Financial Market

Law amending the Law on Financial Leasing, Factoring and Financing Companies and Other Laws (“Amending Law”) entered into force on March 7, 2021. Savings finance companies (“Companies”) are included within the scope of the Law and regulations regarding such Companies are introduced.

Some of the requirements brought for Companies are as follows:


(i) The trade names of the Companies will bear the phrase “Savings Finance Company”.

(ii) They will be incorporated as a joint stock company with a paid-up capital amount of at least TL 100,000,000. The minimum capital amount of other companies subject to the Law will be at least TL 50,000,000.

(iii) The conditions applicable for financial leasing, factoring and financing companies under the Law will also be applicable for the Companies.

Prohibited Transactions:

(i) The prohibition of fund raising imposed on financial leasing, factoring and financing companies will not be applicable to Companies.

(ii) Companies will only finance housing, workplaces under a roof or vehicle sales registered in Turkey.

(iii) The Companies will be prohibited from using expressions and phrases that will create the impression of a bank and the phrase “participation” in all kinds of documents, announcements and advertisements.

Merger, Transfer, Demerger and Liquidation:

Mergers, transfers, demergers and voluntary liquidations of the Companies will be subject to the supervision of the Banking Regulatory and Supervisory Agency and the permission of the Banking Regulatory and Supervisory Board.

Protective Regulations:

In the event of weakening of the financial status or increased financial risks, the Banking Regulatory and Supervisory Agency will be authorized to request from Companies subject to Law to take the necessary measures according to a plan it will approve.

In case of liquidation, Companies will put aside 0.5% the organization fees they collect, from their income accounts to be paid to the customers.

Savings Finance Agreement:

Companies will sign a savings finance agreement in writing with customers according to interest-free financing principles.

Savings Finance Activities:

Companies will (i) prepare a separate savings and financing plan for each customer and customer group, (ii) will have to segregate their savings fund pool accounts from their other accounts, and (iii) operate based on interest-free financing principles.

Financial Institutions Association:

With the Amending Law, the name “Financial Leasing, Factoring and Financing Companies Associations” is changed to “Financial Institutions Association” (“FIA”). The (a) Companies, (b) Other Companies, (c) asset management companies and (d) institutions that are subject to Banking Regulatory and Supervisory Agency’s supervision and deemed fit to become members will be obliged to become members of FIA.


In case of violation of the Prohibited Transactions and limitation to the exercise of the customer of its right of withdrawal or termination there are sanctions such as administrative fines and/or imprisonment.

Revocation of Operation Permit and Liquidation:

With the Amending Law, a special regulation will be applied for the revocation of the licenses or liquidation of Companies.

Compliance Process:

Those who carry out savings finance activities will (a) apply to the Banking Regulatory and Supervisory Agency within one month following March 7, 2021, (b) submit a plan that they will make their status in accordance with the provisions of the Law within no later than 6 months or liquidate without damaging the customer rights and interests, (c) if the plan is deemed appropriate, carry out the necessary transactions within the time periods specified in the plan. Provisions regarding those who engage in activities without obtaining the permissions will be applied for companies that continue to operate without making an application within the said one month period.

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