Banks set for inflation accounting switch, starting in 2025.

January 16, 2024
1 min read


  • Turkey’s banks and other financial institutions will switch to inflation-adjusted accounting starting from January 1, 2025, according to the Banking Regulation and Supervision Agency.
  • Inflation accounting incorporates high inflation into financial statements and shields companies from higher taxes.
  • While the interest rate on deposits has been declining, the interest rate on personal loans has increased.
  • Banks began raising the policy rate, causing interest rates on loans to rise.

Turkey’s banking sector will transition to inflation-adjusted accounting from January 1, 2025, as announced by the Banking Regulation and Supervision Agency (BDDK). This decision also applies to financial leasing, factoring, financing, savings financing, and asset management companies. The switch to inflation accounting is a practice that incorporates high inflation into the financial statements of businesses, thus shielding them from higher taxes.

Meanwhile, there have been changes in interest rates. The interest rate offered by local lenders for 3-month deposits has been decreasing, dropping from 52% in December to 51.29% in the week ending January 5. On the other hand, the average interest rate for personal loans has increased to 63.42%. In the first week of 2023, the interest rate on personal loans averaged 24.24%. This increase in interest rates on loans can be attributed to the Central Bank’s decision to raise its policy rate, the one-week repo auction rate, by a cumulative 3,400 basis points from 8.5% to 42.5% between June and December.

Additionally, the interest rate on car loans has also experienced fluctuations. In mid-November, the interest rate on car loans stood at 46%, but it dropped to 33.3% in the first week of December. However, these rates started increasing again and reached 36.1% as of January 5.

Overall, the switch to inflation-adjusted accounting starting from 2025 will have significant implications for Turkey’s banking sector and financial institutions. It aims to provide a more accurate representation of financial statements, taking into account the impact of inflation. The interest rate changes highlight the volatility of the market and the effects of decisions made by the Central Bank on borrowing costs for individuals and businesses.

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