Turkey amends Banks Act
Turkey has caught up with international standards in the regulation of its banking industry together with the amendments made to the new Banks Act No. 4389 (the Banks Act) in December 1999.
The most important feature of the Banks Act is the introduction of an independent supervisory authority, called the Banking Regulation and Supervision Agency (the Banking Agency), which will monitor and supervise the banking industry. The Banking Agency has full authority over entry into and exit from the banking industry, and has with authority over changes to the implementing regulations. Also, the Banking Agency has been authorized to grant and cancel permissions for banking operations and accepting deposits. Following Temporary Article 1 of the Banks Act, the chairman and members of the Banking Agency were appointed by the Council of Ministers on April 1 2000 for a period of six years. The Banking Agency will start to function in full as of September 1 2000. Until then, the powers granted to the Banking Agency will be exercised by the Council of Ministers, the Undersecretariat of the Treasury, the Central Bank and the Savings Deposit Insurance Fund, as appropriate.
In order to exercise these powers, the Banking Agency will issue certain regulations with respect to matters including: the banks to be established in Turkey, applications to be made by foreign banks to open branches in Turkey and principles on granting permits to these banking activities. The Banking Agency will also lay down the principles of banking operations and of acceptance of deposits by banks. It is also foreseen that risks in the banking industry will be observed and supervised by the Banking Agency through a regulation by which banks will be forced to establish an internal audit system as well as a risk control and management system. All such regulations of the banking industry will be completed before September 1 2000.
The authorities granted to the Banking Agency are considered a satisfactory step towards compliance with international standards in the regulation of the banking industry. Moreover, the new provisions of the Banks Act are in compliance with the recommendations introduced by the Basle Committee of the Bank for International Settlements, and in parallel with the directives of the EU in many ways.