Turkish Citizenship by InvesmentTURKISH LIRA DEPOSIT ACCOUNT INDEXED TO THE EXCHANGE RATE

TURKISH LIRA DEPOSIT ACCOUNT INDEXED TO THE EXCHANGE RATE

 

The application of the Turkish lira Deposit Account Indexed to the Exchange Rate started to be implemented with the ” A Statement on supporting the Conversion of Turkish Lira Deposits and Participation Accounts”, numbered 31696, published on 21 December 2021. People will be able to benefit from this application starting from December 20, 2021.

Only real persons residing in Turkey (including Turkish citizens who are workers abroad, self-employed and self-employed natural persons with legal residence in Turkey) can benefit from this application.

The difference that will occur if the yield of TL deposit accounts in the bank remains below the foreign exchange yield will be paid to citizens. In addition, exporters will be given a forward-term exchange rate figure by the Central Bank. The cost of the foreign currency convertible deposits will be covered by the Treasury. That is, this system promises that citizens will receive this return if the TL asset in the bank is higher than the increase in the exchange rate of the deposit gain, but if the exchange rate return is higher than the deposit gain, the difference will be paid directly to the citizen.

 

The conditions of the System are as follows;

• The product will compare the interest rate that will be processed on TL time deposit accounts and the exchange rate change on the account openning and maturity dates, and will profit the account over higher rate.
• There will be no withholding tax on the new deposit product.
• For exchange rate difference calculations, the Central Bank of the Republic of Turkey (CBRT) will publish the US dollar exchange rate at 11:00 every day.
• If the exchange rate change remains above the interest rate at the end of the maturity date, the difference that may occur will be reflected in the customer’s account in Turkish Lira.
• Accounts can be opened with maturities of 3, 6, 9 and 12 months.
• The minimum interest rate will be applied as the Central Bank’s Policy Interest Rate.
• Any bank that wants to join the system will be able to.
• In case of withdrawal of funds from the account before maturity, the account will be converted into a non-due account, the right to interest will disappear. It will also be updated at the CBRT exchange rate on the date the account is opened.

 

To explain with an example,

 

The Scenario Where the Exchange Rate Increase Is Higher Than the Interest Rate Return                     

Account opening rate: 1 USD = 10 TL

Account opening amount: 100.000 TL

Maturity: 92 Day

Sample Interest rate: %15

Net interest that the client will receive:  3.781 TL

Exchange rate at maturity: 1 USD = 15 TL

The return that it will receive from an increase in the exchange rate:  50.000 TL (%50 exchange rate increase x 100.000 TL = 50.000 TL)

The decimated amount of 50.000 – 3.781 = 46.219 TL will be paid to the customer separately.

The client will receive a total income of 50,000 TL.

At the end of the term, the customer will have a balance of 150,000 TL.

 

The Scenario Where the Exchange Rate Increase is Equal to or Lower than the Interest Rate Return

Account opening rate: 1 USD = 10 TL

Account opening amount:: 100.000 TL

Maturity: 92 Day

Sample Interest rate: %15

Net interest that the client will receive: 3.781 TL

Exchange rate at maturity: 1 USD = 10,3 TL

The return that it will receive from an increase in the exchange rate:  3.000 TL (%3 exchange rate increase x 100.000 TL = 3.000 TL)

Since the deposit interest rate yield is higher than the exchange rate increase, the customer will receive the deposit interest.

The client will receive a total income of 3,781 TL.

At the end of the term, the customer will have a balance of 103,781 TL.

 

A Scenario where the Exchange Rate Decreases at the End of the Maturity Compared to the Beginning of the Maturity 

Account opening rate: 1 USD = 10 TL

Account opening amount: 100.000 TL

Maturity: 92 Day

Sample Interest rate: %15

Net interest that the client will receive: 3.781 TL

Exchange rate at maturity: 1 USD = 8 TL

Since there is no exchange rate increase, the client will receive the deposit interest directly.

The client will receive a total income of 3,781 TL.

At the end of the term, the customer will have a balance of 103,781 TL.

 

A Scenario in Which the Closure is Made Before the Due Date and the Exchange Rate Falls                          

Account opening rate: 1 USD = 10 TL

Account opening amount 100.000 TL

Exchange rate at the early closing date: 1 USD = 8 TL The balance of 80.000 TL is transferred to the customer’s account over 1 USD = 8 TL at the early closing date, which is a low exchange rate level. In this case, the principal of the customer will be reduced by 20,000 TL.

 

A Scenario in Which the Closure is Made Before the Due Date and the Exchange Rate Remains the Same or Rises                                                                                        

Account opening rate: 1 USD = 10 TL

Account opening amount: 100.000 TL

The exchange rate at the early closing date: 1 USD = 12 TL

100.000 TL balance is transferred to the customer’s account over 1 USD = 10 TL at the opening date, which is a low exchange rate level.