by Sebnem Turhan – Merve Yigitcan
Despite the increase in Eximbank rediscount credits and company limits, credit applications are delayed due to insufficient limits of intermediary banks.
The fact that the Central Bank updated the daily limits twice and raised them up to TRY 3 billion did not help the real sector to wait in line for rediscount credits. Sources in the banking sector stated that the limits were filled immediately and that the loans could be disbursed 1-1.5 months after the applications.
The Central Bank and the new economic administration took steps to help exporters access financing. The daily limit for rediscount credits was increased to 3 billion liras, a limit was imposed on the discount rate in rediscount credits, and it was ensured that the interest rate would not exceed 1.75 points above the policy rate. In the rediscount credits extended by Eximbank and commercial banks according to their limits, problems continue on the commercial bank side. While banking sector sources state that they are able to extend credit after 1-1.5 months, and that billions of liras of applications have accumulated, real sector representatives complain about both the prolonged waiting periods due to low limits at commercial banks and the increase in rediscount costs due to policy rate hikes. Central Bank Governor Hafize Gaye Erkan said at the ISO meeting that they were focusing on increasing the share of commercial banks in rediscount credits.
Limit increased 10 times in total
On July 21 and September 12, the Central Bank revised the daily limit for export and FX-earning services rediscount credits, raising the daily limit by a factor of 10 from its previous level to TRY 3 billion. In addition, the condition of selling 30 percent additional export value for rediscount credit utilization was removed and foreign exchange purchases within the scope of import payments were exempted from the commitment not to purchase foreign currency during the rediscount credit maturity. Following the November Monetary Policy Committee decision, the discount rate for export and foreign currency earning services rediscount credits was kept constant at a maximum of 25.93 percent.
The daily limit for rediscount credits is TRY 3 billion. According to information obtained from banking sector sources, one third of this limit is allocated to commercial banks and two thirds to Eximbank. The daily limit of TRY 1 billion is distributed to banks according to certain conditions. According to information obtained from real sector sources, in applications through Eximbank branches there is a maximum 2 weeks wait period after the application until the access to credit is provided. However, this period is considerably longer when it comes to public and private banks. Another real sector source from the food sector said that he applied to a public bank for rediscount credit yesterday and was informed that he would use the credit on January 15. The sector representative emphasized that the period is quite long. Real sector sources who provided information to EKONOMI daily agreed that the waiting period is as follows: TRY rediscount credit from Eximbank branches is accessed within 2 weeks, while credits from other bank branches are accessed in the range of 6-8 weeks.
It is more attractive to use foreign currency loans
A ready-to-wear company owner said that it takes a long time to get a loan because the limits allocated to banks other than Eximbank run out immediately, “TRY rediscount credits are already lower than commercial credits in terms of cost, but they may not be that suitable for exporters. Considering that the TRY will be suppressed for a while, exporters like us, who do not have a net foreign currency risk, use foreign currency loans at a cost of less than 10 percent. Because it makes more sense and there are banks in the market that offer 7 percent, 8 percent, 9 percent for foreign currency loans.”
Spot loan available at 48 percent interest
Another businessperson operating in the chemical sector emphasized that the waiting period was prolonged due to the very low TRY rediscount credit limits of the banks, but he also pointed out that in the current situation, with a cost of up to 40 percent, TL rediscount does not have an abnormal attraction. The businessperson gave the following information: “Currently, if you get a spot loan, there is 48 percent interest. I used TRY rediscount for my own company before the two interest rate hikes. However, we were in line again for TRY rediscount credit from an Eximbank branch 2 weeks ago. However, after the last interest rate hike, since we found the cost high, we have given up our right and let someone else use our turn. But those who are in dire need of financing create a density in the TRY rediscount without paying much attention to the cost.”
Central Bank Governor Hafize Gaye Erkan stated at the ISO Professional Committees Joint Meeting last week that they were discussing increasing the share of commercial banks in rediscount credits.