Several banks ‘practice usury,’ minister criticezes

Several banks ‘practice usury,’ minister criticezes

Several banks ‘practice usury,’ minister criticezes

Despite low in number, some Turkish banks charge compound interest, which is in fact practicing usury, according to Economy Minister Zafer Çağlayan. AA Photo

Some Turkish banks practice usury, Economy Minister Zafer Çağlayan said yesterday, without naming any specific banks.

“A banking system which wants to have their cake and eat it too is [in fact] a usury system. I cannot call it ‘banking.’ If banks charge compound interest, that is practicing usury,” he said, according to Anatolia news agency.

His remarks came as the government is slated to provide new benefits for consumers by drafting a consumer code set to cut into bank profits among other measures, according to media reports.
Banks, tour operators, door-to-door sales firms and electric distribution companies will be particularly affected by the draft if enacted. Banks are expected to resist the new code.

Customs and Trade Minister Hayati Yazıcı has said there will be intense negotiations with banks and other industry representatives over the regulatory changes, which are being enacted as part of efforts to adapt national regulations to European Union legislation. Banks may have to give up 31 items of non-operating revenue sources such as credit card subscription fees, as well as other service fees for deposit accounts and loan applications.

Lenders, however, are unlikely to easily forego such revenue sources, which amount to 9.3 billion Turkish Liras collectively, even though public anger against them has precipitated public anger and resulted in court cases.

The minister is expected to push the new regulations through as the draft will be submitted to the European Union next month.

The draft calls for the implementation of punitive measures against tour operators that deceive customers, abandon them at airports, cancel tours at the last minute without any excuse and fail to meet commitments. Such tour operators will not only have to compensate for losses but will also have to pay their costumers an additional indemnity.

Door-to-door companies without a strong capital structure will not be allowed to operate in the sector. The draft envisions the implementation of a 14-day definitive return period to keep ill-intentioned firms out of the sector.