Turkey’s banking watchdog called on banks to lend to consumers and businesses at a reasonable cost, saying they were performing a public service.
Banks should avoid excessive profits, said Mehmet Ali Akben, head of the Banking Regulation and Supervision Agency (BDDK), Dünya newspaper reported on Monday.
“The effective operation of the credit mechanism is possible with fair and sustainable pricing,” Akben said in a speech to bankers in Istanbul. “We expect all players in our financial sector to be constructive. They should be reasonable and remember that they are actually performing a public service.”
Turkey’s government is seeking to stimulate economic growth through increased lending by the finance industry. The authorities pressured banks to approve more loans at a lower cost last year to help boost the economy during the COVID-19 pandemic. State-run banks issued loans carrying interest rates of below annual inflation, sparking a borrowing boom.
The average annual interest rate on a personal loan stands at 23.29 percent, according to central bank data. That compares with consumer price inflation of 16.6 percent. Commercial loans carry an average interest rate of 21.63 percent.