Turkey's watchdog warns banks against recalling loans

In an interview with Anadolu Agency Thursday, Mehmet Ali Akben, head of Banking Regulation and Supervision Agency, said: "We absolutely do not allow banks to recall loans on the pretext of seeking an extra profit.

"We will take necessary steps against any unfair practices in the sector. People can complain to us by calling on our hotline for any wrongdoing in the sector and giving us the bank's name."

Akben's warning came after President Recep Tayyip Erdogan on Wednesday urged lenders to reduce interest rates in order to boost growth.

Erdogan termed the recalling of bank loans without sufficient reason as "treason”. He told banks they should not be charging high interest rates in the wake of July 15 foiled coup and promised to take action against lenders who "go the wrong way".

Akben also warned banks to not be in a race for collecting deposits by offering higher interest rates, which reflects as additional credit costs to the borrowers.

"The banks should give up the deposits race. They made profits when the interest rates were around 7 or 8 percent as well. We believe the interest rates will go down to more decent levels."

On Wednesday, the state-run Ziraat Bank cut home loan rates following a central bank decision to trim the overnight lending rate to 8.75 percent, bringing Ziraat’s owner-occupier rate to below one percent per month. Halkbank followed Ziraat Bank on Thursday, cutting its home loan to under one percent per month.

Akben said they expect more banks to follow state-run banks downward revision in consumer, corporate and housing loans.