The rapid development of technology has led to the advancement of the age and the change of the world. This change has brought new needs with it. These needs have paved the way for the development of different methods and alternative financial resources in all sectors. These alternative financial resources have not only affected the sectors but also started to shape the economic order and financial strategies of the countries. Our country has also been affected by this change and these alternative financial resources have contributed significantly to our country.
What is the interest-free savings financing system?
The-saving based interest-free housing and vehicle financing system is a type of financial activity in which people obtain the right to purchase housing loans, other real estate loans (workplace, renovation, etc.) or vehicle in exchange for keeping deposits for a certain period of time. The system is generally based on the principle of saving money in a pool of participants as much as the number of installments, aimed at enabling people to own a house and car with their own savings. The person who becomes a member of the system in return for a certain organization fee (5% of the average financing amount) determines the price of the real estate or vehicle to be purchased by himself and selects the installment price according to his/her own ability to pay.
What is the basis of development of interest-free savings financing system?
The increasing widespread use of interest-free savings financing systems, one of alternative financial resources, stems from the need to make it easier for individuals to invest and to minimize risks. Those who are sensitive to the interest rate system or want to own a house, vehicle or workplace without being affected by the high exchange rates in the banking system lead to the increase of the role of interest-free savings financing systems.
How does the system work?
People participating in the organization make their payments in equal installments until the end of maturity. The cost of the house-car determined at the end of a maturity between 60 and 120 months, with or without draw, is paid to the customer. The customer will have the right to withdraw without any justification within 14 days following the signing of the agreement. In this case, all savings will be refunded, including the participation fee. In the event of a transaction contrary to the right of withdrawal and termination of the agreement, an administrative fine of up to 5 times the amount of the transaction, not less than 62.500 Turkish Lira, will be imposed.
How many people and institutions are included in the system?
In Turkey, the-saving based interest-free housing and vehicle financing system is expanding rapidly in recent years. In addition, the number of interest-free financing companies is more than thirty today. It is included in the statistics that there are more than 250,000 members in the aforementioned financing companies and 90,000 people buy houses with financial support.
How is the system considered as legal term?
The agreements signed by the Savings Finance Companies with the participants are called atypical agreements. Although these contracts are signed under the name of housing / vehicle financing contract, the company does not provide direct financing as a credit institution and does not make a sales agreement, only a coordination between the “money – customer – seller” triangle is provided and sales is mediated in the execution of the agreement. Since organization services are provided by the company, agreements are also called organizing agreements.
The savings financing agreement grants right to the person who participates in the system to use financing for the purchase of housing or vehicle, provided that previously determined conditions are met, depending on a certain amount of savings and the savings period.
In addition, with this agreement, the company gives the right to manage the accumulated savings amount of the person that participates in the system, to receive repayment, financing and organization fee.
Therefore, the agreement is defined as a agreement arranged on the basis of interest-free financing.
What is the legal basis of the system?
In Turkey, no real or legal person can collect deposits except banks which are permitted by the Banking Law No. 5411 and banks which are authorized according to special laws. The aforementioned system does not have a legal infrastructure, and the law proposal, which includes the control of savings financing companies regarding the acquisition of interest-free housing and vehicles, has been submitted to the presidency of the council. Financial Leasing, Factoring and Financing Companies Law No. 6361 was amended and the companies engaged in the interest-free housing and vehicle acquisition were included in the scope of audits and regulations. In this context, the name of the Financial Leasing, Factoring and Financing Companies Law No. 6361 has been changed as ‘’ Financial Leasing, Factoring, Financing and Savings Financing Companies Law’’ and the name of the Association of Financial Leasing, Factoring and Financing Companies has been changed to ‘’Association of Financial Institutions’’.
What regulatory provisions are included in the legal regulation?
The merger, transfer, division and voluntary liquidation of the institutions of the savings finance companies will be subject to the permission of the Banking Regulation and Supervision Agency (BRSA) within the framework of certain procedures and principles. In this context, unauthorized and unlicensed use of the system by individuals or institutions other than those licensed by the BRSA is prohibited. The procedures and principles for the use of savings financing activities and savings fund pool assets are specified. In addition to this;
- For savings finance companies, the minimum paid-in capital amount will be at least 100 million TL,
- Savings finance companies can only engage in financing activities in specified areas,
- The aforementioned companies will operate on interest-free principles and corporate practices should be established in this regard
- It may be required to take additional measures by the BRSA in cases of deterioration of the asset quality of companies and the balance of income-expense and similar situations,
- Embezzlement of the chairman, members and other members of the savings financing company and the penalties that may be imposed due to embezzlement,
- The mortgage transactions of the real estates (immovable properties) that are shown as security against the financing to be provided by the companies can be registered with the title deed, if the parties so request, and
- The procedures and principles regarding the cancellation of the operating licenses of the savings financing companies and their decision to liquidate are regulated. According to this;
- Regarding companies whose financial situation is decided to be liquidated by the BRSA decision due to deterioration, in order to carry out the liquidation process effectively and to protect the rights and interests of the savers; Certain provisions about banks subject to liquidation by the Savings Deposit Insurance Fund (SDIF) in the Banking Law No.5411 will also apply to savings financing companies and include the responsibility of savings finance company managers among these provisions,
- As a result of the audits carried out by the BRSA, except for the voluntary liquidation of the companies operating; If it is determined that the financial situation of the company has deteriorated in a way that it cannot continue its obligations, it has been stipulated that liquidation will be carried out by a liquidation committee consisting of at least three members who will be notified by the BRSA and the SDIF, in case the company fails to take remedial or restrictive measures first.
What are the provisions protecting the savers included in the system?
In addition to the determinations regarding the liquidation process in order to protect the rights and interests of the savers;
- It has been obliged to set aside the organization fees 5/1000 by the savings finance companies to be paid to the savings owners in case of liquidation,
- Participants are provided with the right of withdrawal and the right to terminate the agreement.
- Judicial penalty provisions have been drawn up to prevent the return of their savings in the event that the savings finance participants exercise their right of withdrawal and termination of the agreement, for individuals and the managers and members of the savings financing company who commit embezzlement.
As a result, companies that are operating in the-saving based interest-free financing system presence in Turkey is based on a history of nearly 30 years but has increased rapidly in the last 5 years the number of these companies. It was included within the scope of the Financial Leasing, Factoring and Financing Companies Law No.6361 and “Savings Finance Companies” were included in the financial system as a new type of financial institution. Establishing the legal infrastructure of the savings-based financing method and being subject to BRSA audit, it will provide a confidence for the participants.
Dilek Akın Oğuz, Attorney At Law