The Communiqué on the Procedures and Principles Regarding the Fees that Banks Can Charge Their Commercial Clients ("Communiqué") was published in the Official Gazette dated February 10, 2020 and numbered 31035. The Communiqué mainly regulates types and upper limits of the fees that can be charged by banks for their products and services provided to commercial clients, excluding the financial institutions (i.e. banks, financial leasing, factoring and finance companies). Significant changes have been made to the Communiqué on February 29, 2020, March 11, 2020 and March 29, 2020 in order to reflect market needs. In this article, our aim is to summarize some of the significant provisions of the Communiqué.
- General Overview
With the Communiqué, the fees that banks can charge their commercial clients for products and services have been limited to 51 items under four categories as "Commercial Loans", "Foreign Trade", "Cash Management" and "Payment Systems".
Under Article 6/1 of the Communiqué, banks are authorized to freely determine the fees unless otherwise provided in the Communiqué. Except for the fees allowed in the Communiqué, no additional fee can be charged to the commercial clients under any other name for the products or services that would be provided under the abovementioned four categories. However, the amounts to be paid to third parties by the banks can be reflected to the commercial clients.
Article 6/3 of the Communiqué allows banks to determine special products or services, with the approval of the Central Bank of the Republic of Turkey, provided that those products or services fall under the abovementioned four categories listed in the Communiqué.
- Commercial Loans
The Communiqué divides fees that can be charged by banks for commercial loans into four sub-categories (i.e. loan commitment and utilization, collateralization, loan risk process and paying off).
According to Article 9/1 of the Communiqué, loan commitment fees can be charged in return of all loan limits that can create a loan risk, including all non-cash loans within the scope of foreign trade and commercial credit cards. Loan utilization fees can be charged only for cash loans. The loan commitment fee cannot exceed 0.25% of the committed loan limit, and the loan utilization fee cannot exceed %1 of the loan granted.
Article 10 of the Communiqué states that the fees, that can be charged for expert transactions and movable and immovable pledges and mortgages carried out during the term between loan commitment and paying off the loan, cannot exceed the amount paid by the bank to third persons or reasonable amount of the service, if the service is provided by the bank.
As per Article 11/1 of the Communiqué, banks can charge their commercial clients with a prepayment fee; in case one or more installment(s) of the loan is paid before it is due date or loan debt is partially or wholly prepaid.
Accordingly, banks are required to accept commercial clients' prepayment requests in case they request to prepay entire loan. Furthermore, if commercial clients prepay one or more installment(s) or partially or wholly prepay the loan debt, then, banks are obligated to discount all interest and other cost elements that will not accrue due to the prepayment.
In such a case, the prepayment fee will not exceed (i) for Turkish lira loans with a remaining maturity of 24 months or less, 1%, and (ii) for Turkish lira loans with a remaining maturity more than 24 months, 2% of the prepaid amount, calculated through by taking into consideration the required interest and cost element discount. For foreign currency and foreign currency indexed loans, these upper fees are applied with one point increment.
- Foreign Trade
Under the "foreign trade" category, the Communiqué regulates the fees that can be charged by banks in return of non-cash loans and all other products and services provided to commercial clients within the scope of import and export transactions. The Communiqué divides fees that can be charged by banks for foreign trade into three sub-categories (i.e. import transactions, export transaction and import/export common transactions), however, it does not determine any upper limit for these fees.
- Cash Management
The fees that can be charged by banks for cash management is divided under eight categories (i.e. supplier financing and direct borrowing system, deposit, participation fund and precious metal deposit account, money and precious metal transfers, safe deposit box, intermediary services, document and informing fees, cheque and promissory note transactions).
Article 14/1 of the Communiqué prohibits banks to charge their commercial clients for opening, operating, custody services and data processing system investments of deposit, participation fund and precious metal deposit accounts of commercial clients.
Except for the cash deposits carried out through branches after 15.30 p.m., no cash deposit fee can be charged for cash deposits made by the commercial client or a third person to the commercial client's deposit and participation fund account. Article 14/3 of the Communiqué prohibits banks from charging fees for limit/debt/balance inquires conducted by the commercial client through ATMs of the bank where its account is located and for withdrawals within the scope of limits determined under the agreement executed between the bank and the commercial client. Furthermore, Article 14/4 of the Communiqué stipulates that the fee that can be charged for the transactions carried out using the methods and tools outside the bank cannot not exceed 15% of the amount paid to the other institution for such transaction.
Communique also sets forth the upper limits for fees to be charged for electronic fund transfers (EFT).
Under Article 16 of the Communiqué, banks are allowed to charge their commercial clients with safe deposit box fees for services determined under the agreement executed between the bank and the commercial client and such fee cannot exceed one-year rental fee of the safe deposit box.
- Payment Systems
According to the Communiqué, fees that banks can charge their commercial clients for payment systems are listed under three sub-categories (i.e. POS fees, member merchant fees and transactions with commercial cards).
Article 20 of the Communiqué regulates the fees to be applied to member merchants in detail.
At the purchase of products and services with no installment, in case the transaction amount is transferred to member merchant's account on the following day of the transaction, the fee to be applied cannot exceed the total of the figure as 0.45 points added to the monthly reference rate which is announced by the Central Bank of the Republic of Turkey. Such maximum fee for member merchant is applied by updating the reference rate as of the first day of the month following the date of publication of the reference rate.
At the use of credit cards which are issued abroad, in case the transaction amount is transferred to member merchant's account on the following day of the transaction, the maximum member merchant fee cannot exceed 1.60%.
As per Article 20/3 of the Communiqué, at the purchases of products and services, payments of which are made by installments, the maximum member merchant fee is reached by adding the maximum applicable member merchant fee applied to purchases payments of which are made in a single payment (i.e. payment without any installment) to at most 50% of this amount for each installment.
Article 20/5 of the Communiqué states that in case the transaction amount is not transferred to member merchant's account on the following day of the transaction, maximum member merchant fee is decreased by considering the number of days between the following day of the transaction and the day when the transaction amount is transferred to member merchant's account. The period in which the transaction amount is transferred to member merchant's account cannot exceed 40 (forty) days as of the following day of the transaction with no installment.
Lastly, under Article 21 of the Communiqué, no fee can be charged on commercial credit cards for limit excess, receipt postponement, installment, payment date extension and other similar services.
- Conclusion
The Central Bank of the Republic of Turkey has introduced the Communiqué in order to determine upper limits of fees that can be charged by banks for their products and services provided to commercial clients. This Communiqué will increase predictability and transparency in the transactions carried out between banks and their commercial clients and prevents excessive charging.
This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in June 2020. A link to the full Legal Insight Quarterly may be found here
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
