Digital Banking Regulation goes into effect in Turkey


On 1 January 2022, Regulation on Operating Principles of Digital Banks and Banking as a Service entered into force.

General principles

According to the Regulation, unless otherwise stated in the Regulation or relevant secondary legislation, digital banks can perform all the activities that credit institutions can perform, depending on whether they are deposit or participation banks.

Concerning the restrictions to be imposed on digital banks, only financial consumers and small and medium-sized enterprises (SMEs) can be customers of digital banks.

Digital banks may not operate physical branches or establish similar units, such as a correspondent, agency or representation office, no matter under which title it is established, except for the general directorate and service units associated with the general directorate. It is not a violation, however, to have establishing units for managing customer complaints, receiving services from support-service organisations in a way to communicate face-to-face with the customer, and completion of certain transactions as defined in the Regulation by the personnel of the digital bank or the support-service organisation through face-to face communication with the customer.

The upper limit of the total unsecured cash consumer loans provided to a customer, excluding expenses and cash withdrawals by means of credit cards and overdraft accounts, is four times the declared average monthly net income of the customer concerned that is confirmed by the digital banks. If it is not possible to determine the average monthly net income of a customer, the unsecured cash consumer loan provided to that customer cannot exceed TRY 10,000.

Conditions for the establishment of a digital bank

The conditions for digital banks to be established and obtain an operating permit are the conditions for establishing and obtaining a banking operating permit set out in the Regulation on Transactions of Banks Subject to Permit and Indirect Shareholding. Also, the conditions covered by the Regulation will apply to digital banks as additional provisions.

In case the applicant’s controlling shareholders are legal entities providing technology, electronic commerce, or telecommunication services, the Turkish Banking Regulatory and Supervisory Authority (BRSA) may stipulate that these legal entities or the real or legal persons controlling these entities must be resident in Turkey and sign an information exchange contract with the Risk Centre.

According to the Draft Regulation, the minimum capital required to establish a digital bank is TRY 1 billion (EUR 90.66 million), which must be provided in cash and free of collusion.

Current status of banks and other financial institutions

Banks, other than digital banks, holding an operating license and being able to provide services through their physical branches within the framework of their current operating permits do not need to submit a separate application under the Regulation in order to provide services partially or completely through electronic banking distribution channels. This also applies to services partially or completely through electronic banking distribution channels with a different brand name and under the same legal entity if the services are limited to the scope of existing operating permits. These banks are not subject to the provisions of the Regulation regarding digital banks. The Regulation, however, does not contain a special provision for the current status of other financial institutions.

For more information on the Turkish regulation on digital banking and BaaS, contact your regular CMS advisor or a local CMS expert: Alaz Eker Ündar.