Turkey Considers Relaxing Card Limits to Combat Shadow Spending

Turkey may relax curbs on credit card usage and loans as consumers find less transparent ways to maintain their spending habits.

The banking regulator discussed loosening restrictions at its most recent financial stability meeting, Mehmet Ali Akben, its head, told state-run Anadolu Agency. The watchdog wants to find ways to better monitor consumer spending without encouraging people to get into debt, he said.

“Instead of using credit cards, customers are becoming indebted in different ways,” the regulator said, mentioning cheques, IOUs and stores’ own, informal payment plans. “At least in the old days we could see them and monitor them; now it’s becoming harder to have oversight.”

Turkey banned installments for imported items such as telecommunications equipment and put a cap on installments for consumer and car loans as part of the rules announced at the end of 2013. Consumer indebtedness had doubled over the past three years, boosting Turkey’s current account deficit.

Credit card installments accounted for 47.5 billion liras ($16 billion) of consumer debt in Dec. 13, which has declined by 30 percent since the measures were announced.

The major beneficiaries of a change would be “banks with strong credit card businesses,” such as Yapi Kredi, Garanti, and Akbank, according to Oyak Securities’ Aykut Ahlatcioglu. The effect on Turkey’s current account deficit, at just under six percent of its GDP, would probably be negative, the Istanbul-based analyst said in an e-mailed note.

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