The amendments to the Law No. 6361 on Financial Leasing, Factoring and Financing Companies ("Law No. 6361") entered into force by publication in the Official Gazette No. 31416 on March 7, 2021 with the Law no. 7292. While the name of the Law 6361 is revised to read as Financial Leasing, Factoring, Financing and Saving Finance Companies No. 6361, the scope of activities designated to Association of Financial Leasing, Factoring, Financing Companies is further regulated and the name is changed to the Association of Financial Institutions.
Leasing, factoring, financing, savings finance and asset management companies, as well as other institutions which are subject to the Banking Regulation and Supervision Agency's supervision and found suitable, are now obliged to become members of the Association of Financial Institutions.
The Law no. 7292 essentially provides a regulatory framework for the saving finance companies and their activities and introduces new definitions to regulate the terms "organization fee", "allocation", "saving finance activities" and "pool of saving fund".
Saving finance activity shall involve saving for a given period in accordance with the principles of interest free financing aimed at the acquisition of housing, roofed workplace or vehicle provided that the conditions predetermined in a saving finance agreement are met.
While the saving finance companies which will provide finance to housing, roofed workplace or vehicle under saving finance agreements, they will also not be permitted to lend to third parties or acquire shares and prevented from the use any terms and appellations that are likely to create impression as if they are banks or the word "participation" in their trade name. This will distinguish these companies from the participation banks.
Conclusion:
It is promising to see that the saving finance services and companies are now regulated and included into the scope of the Financial Leasing Law which we believe will bring some sort of legal clarity for the companies engaged in saving finance activities.
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