Financing companies are credit institutions that have come to being due to the needs of consumers as well as goods and services providers.  They can be defined as lending institutions that make payments directly to the suppliers of goods and services on behalf of the real or legal persons who purchase such goods or services, based on agreements entered into between the financing companies and the suppliers of goods and services. The operation of financing companies in Turkey have their legal basis in the Law no. 6361 on Financial Leasing, Factoring and Financing Companies which entered into force on December 13, 2012[1], and the Regulation on Principles of Establishment and Operation of the Financial Leasing, Factoring and Financing Companies[2].

In order to operate in Turkey as a financial institution (other than a bank) that provides loans to real and legal persons, it is necessary to be structured as a “financing company” pursuant to the Law no. 6361. According to this Law, financing companies can provide loans to real or legal persons for the purchase of any products or services, by making a payment directly to the seller in the name and account of the real or legal person who has purchased the product or the service, upon supply or delivery of the product or the service. The loan repayments are then made to the finance companies by the persons to whom the loan is provided.

The establishment and operation of financing companies are subject to regulation and approval of the Banking Regulation and Supervision Agency (BRSA), which is the regulatory authority in Turkey responsible for regulating financial markets and ensuring the efficient running of the credit system.

Below is an outline of the main requirements for financing companies for obtaining both establishment and operation permits from the BRSA.

Requirements for establishment

Company Type

To begin with, financing companies must be established as joint stock companies, and the share certificates must be issued in cash and all of them must be registered. It is also required by law that the trade name of the company must contain the phrase “Financing Company”.

Founders and Members of the Board of directors

The Law no. 6361 also sets out detailed requirements for the founders of financing companies. Accordingly, the Company founders and those who own ten percent or more of the share capital of the legal persons who are in control of the legal person founding partners of the company must meet the requirements which are specified in Article 6 of the Law. These include, founders not being bankrupt or having declared concordat, not having been sentenced to imprisonment due to certain monetary offences specified in, inter alia, the Turkish Penal Code, Banking Law, Capital Markets Law, having the financial strength and credit to meet the amount of capital undertaken.

The members of the Board of Directors of the company must also meet the conditions envisaged in the Law. In particular, they must have the qualifications set forth under the corporate governance provisions of the Law no. 6361 and have professional experience to realize the planned activities. The company’s Board of Directors cannot be less than three people, including the general manager, who must have at least seven years of experience in the field of business or finance.

Minimum Capital

The Law no. 6361 also sets out minimum capital requirements for the establishment of a financing company. It must be noted that the BRSA Board is authorized to increase the amount of the paid-up capital. Currently, a financing company must have a paid-in capital of at least 50 million Turkish Liras (approx. USD 6,200,000.00) in cash (up from the original minimum amount of 20 million Turkish liras).

Articles of Association

As for the company’s articles of association, these must comply with relevant provisions of the Law, and once approved, any amendments to the articles of association must also be reported to the BRSA and the current version of the articles must be published on the company’s website.

Shareholding Structure

Financing companies must have a transparent and open shareholding structure to allow active control of the BRSA. In addition, they must submit an activity program which contains in detail the business plan, projections regarding the financial structure, budget plan for the first three years and the company’s organisational structure.

Pursuant to Article 4 of the Law no. 6361, after the establishment requirements referred to above are satisfied, permission for the establishment of the company must be obtained from the BRSA Board.

Operating Conditions: 

Scope and Areas of Operation

After the establishment permit is obtained, the Law no. 6361 also sets forth a number of operating conditions for financing companies. First of all, the company cannot operate outside of the main operation areas specified in its Articles of Association. Therefore, the scope and areas of lending must be carefully considered beforehand.

Another important limitation is that the company can only provide lending facilities in the amount of up to 1% of its paid-in capital. The BRSA Board is authorized to decrease or increase this amount up to 5% of the paid-in capital, or to differentiate these amounts on the basis of individual financing companies. Thus, based on the planned volume of lending, the paid-in capital may have to be higher than the required minimum amount.

Restrictions on Guarantees, Collection of Deposit and Insurance

Further operating restrictions can be outlined as follows:

–           Financing companies cannot give guarantees, sureties or letters of guarantee except for those given within the scope of its areas of activity and in a way that does not exceed 20% of its paid-in capital,

–           The company cannot collect any money as deposit or under any name in return for a consideration; except for the issuance of securities, borrowing money from international markets, obtaining funds from partners and associations, banks, money markets and organized markets,

–           The company cannot engage in insurance business except intermediation in the execution of insurance contracts for the goods and services whose purchases are loaned, the guarantees of the loans and the real or legal persons who purchased the loaned goods or services, the repayment of the loan debt and all kinds of insurance that will protect all similar loan elements.

Accounting and Audit Obligations

As for the accounting and audit requirements, financing companies must account all of their transactions based on their true nature and prepare their financial reports and statistical information and submit them to the BRSA in the form and content to fulfil the information requirements in a clear, comparable manner and suitable for audit and analysis.  The companies are obliged to provide the information requested by the BRSA and provide access to all the data processing system to the latter. In addition, the company must undergo independent audit, the reports of which must also be submitted to the BRSA.

Finance Agreements

The Law no. 6361 also specifies for the financing companies the form of providing loans for a product or service. Pursuant to Article 39 of the Law, the financing company must provide loans by way of “finance agreements”, which must be entered into and signed physically or electronically with the sellers who supply the product or service for which the loan will be provided.

Membership to the Association of Financial Institutions (FKB)

Finally, financing companies must become members of the Association of Financial Institutions, which is the public institution tasked by law with the development of the profession, as well as the principles and standards within one month following the date of obtaining their operating permits.

IT Obligations of financing Companies

Based on the Communiqué dated 06.04.2019 on the Management and Supervision of Information Systems of Financial Leasing, Factoring and Financing Companies issued by the BRSA, financing companies have to establish and maintain their primary and secondary (back-up) infrastructure, hardware and software systems inside Turkey. As per the Communiqué, primary systems are broadly defined as:

systems where all the information relating to the matters stated under the Law are kept in an electronic environment that allows secure and on demand access and the complete system consisting of infrastructure, hardware, software and data, which are used to conduct operations.”;

whereas secondary systems are:

back-ups of the primary systems that allows for the continuity of operations within the acceptable interruption periods as defined under the information systems continuity plans and ensures access to all information, in the event of an interruption in the operations run through the primary systems”.

Apart from this obligation, financing companies must comply with further relevant obligations to ensure confidentiality and security of data and allow effective independent audit of their activities within the scope of the Law no. 6361. Among others, financing companies must establish an information system structure and regularly review the policy, procedure and processes; prepare a risk management process which contains an inventory of data assets, an evaluation of possible threats, the precautions and methods for the reduction of risk; establish an information security process, all subject to review and approval by the executives.

The Communiqué allows use of outsourced IT services (including cloud services), however, such outsourcing is subject to, inter alia, the following requirements:

  • Outsourced services must comply with the risk management, security and privacy policies of the relevant financing company,
  • The risk of suspension or termination of the outsourced services must be managed,
  • Access to data must be limited to the information necessary for the performance of services.

As a result, while financing companies may outsource services regarding their information systems, they cannot maintain these systems and their back-ups abroad.


Financing companies offer the main advantage of providing fast, efficient and targeted loans for their customers in Turkey under the supervision of the BRSA. Subject to compliance with the regulatory requirements outlined above, they are expected to effectively compete with the banking institutions in Turkey in meeting their clients’ financing needs.

[1] In Turkish “Finansal Kiralama, Faktoring, Finansman ve Tasarruf Finansman Şirketleri Kanunu”; for text in Turkish see: “”, accessed: 16.04.2021.

[2] In Turkish “Finansal Kiralama, Faktoring ve Finansman Şirketlerinin Bilgi Sistemlerinin Yönetimine ve Denetimine İlişkin Tebliğ”; for text in Turkish see:, accessed: 19.04.2021