Loan restructuring cost tourism TRY 13bn

BANKS are not going after the unpaid debt of companies but rather they are restructuring the debt under instructions from the Banking Regulation and Supervision Agency (BDDK).

Due to the restructuring, the tourism sector is now facing TRY 13bn in interest. The banks are defining the tourism sector as a reliable debtor. However, the sector’s loan debt that is due, of which hotel investments constitute the majority, has not been paid due to the pandemic. So, the banks are restructuring the debt.

With a decision taken on March 17, 2020, the BDDK increased the period of the close monitoring period of normal loans from one month to three months in case of disruption in payments and the period of legal follow-up for loans under close monitoring from three to six months in case the principal and interest installments are not paid.

This was later extended to December 12, 2020, and then to June 6, 2021. The BDDK is expected to extend the deadline until September.

Although it doesn’t have a legal foundation, since the BDDK did not issue a monitoring process for the unpaid loans issued to the banks, it’s a win-win situation. Mehmet Ali Akben, President of the BDDK, announced that the flexibility in extending the monitoring periods of the loans to September is currently being discussed.

The rate of loan monitoring has decreased to 10% from 15% in Istanbul, to 1.5% from 4% in Antalya, to 1.35% from 3.2% in Mugla and to 6.4% from 10% in Izmir. In this period, it is good for the sector that the banks did not initiate a follow-up process for their receivables but it is worth remembering that the sector has an interest burden of TRY 13bn due to the same situation.