| Referring to the rise in consumer loans and outstanding credit card bills by 19.3 percent and totaling more than TL 200 billion at the end of last year, Turkey’s leading bankers have underlined that people should be more careful when spending their money. (source) | |
| “People should not exceed their income when incurring debt. There is a famous idiom that applies: do not stretch your feet any further then your blanket will reach. By following this advice, it will be easier to see a brighter future and both private and corporate fragility will be lessened,” Turkish Banks Association (TBB) chairman and Ziraat Bank head Hüseyin Aydın told the Anatolia news agency on Friday. Data show that consumer loans alone rose 42 percent in 2010, while credit card debt grew 24 percent. In a bid to curb the influx of “hot money” financing the deficit, weaken the lira, and cool credit debt, the Central Bank of Turkey cut interest rates in December and January. To offset that strategy, it also raised the reserve requirements for loans, reducing liquidity and making it more expensive to borrow money from banks. Noting Turkey’s large youth population and strong economic growth, Aydın said it is normal to see a rise in consumer spending in a stable economy. “I need to clarify that we do not want people to stop spending; nevertheless, Turkish people need to be aware of their budget and to adapt their spending accordingly. However, we want to underline that every single person should spend based on their individual savings and assets, and not rely on loans.” The Association of Turkish Participation Banks (TKBB) President and Albaraka Türk General Manager Fahrettin Yahşi has also expressed similar views. “A rapid rise in consumer loans shows us that people are incurring debt as they spent more. This indicates danger. From time to time, excessive indebtedness creates ‘victims of finance.’ We suggest that consumers’ spending parallel their income,” Referring to former Central Bank governor Durmuş Yılmaz’s comments over the same idiom that “[we] should also try to make the blanket bigger,” the TKBB chairman said that this should be a lesson to everyone. “Consumers loans should be analyzed carefully to see what specific types of loans are currently preferred by people. When we know this, we will be able to develop more adequate precautions to avoid excessive consumer indebtedness. For instance, a man with an income of TL 10 should not take out a loan of TL 20. Disproportionate borrowing poses the risk of financial disaster and thus should be studied carefully,” Yahşı said. On the other hand, consumers unions’ and other nongovernmental organizations (NGOs) criticize banks, laying part of the guilt over the huge rise in loans on them as they encourage overspending by providing cheap financing. “I think that banks should be more sensitive to the issue and I disagree with the ideas that ‘banks can reach their goals by expanding their volume of loans’ and ‘they are banks; anything they do is right.’ The market consists of consumers, and legal and financial authorities. A problem among any one of these players can affect the whole system. Therefore, banks need to be more sensitive to this issue.” To Şekerbank chairman Hasan Basri Göktan, the precautions taken by the Central Bank were put in place to curb rising consumer loans in the market: “The most recent data indicates that consumer loan growth has slowed down. Therefore, people should ignore those who scream that Turkey will enter a financial crisis. The Central Bank’s measures were correct and on time. There is no need to worry.” He added that he does not think any additional measures are needed to slow down the growth in the number of loans. Source : http://www.todayszaman.com/news-252093-turkeys-chief-bankers-advise-people-to-stop-excessive-spending.html - July 29, 2011 |
