From the Central Bank of the Republic of Turkey:

REGULATION ON CHEQUE CLEARING ACTIVITIES

PART ONE

Purpose, Scope, Basis and Definitions

Purpose

ARTICLE 1- (1) The purpose of this Regulation is to regulate the procedures and principles regarding the system to be established for ensuring the payment of cheques between bank branches by way of account, the system activities, and cheque clearing and settlement.

Scope

ARTICLE 2- (1) This Regulation covers the procedures and principles to be complied with by Istanbul Takas ve Saklama Bankası Anonim Şirketi and the participants, as well as the principles regarding the clearing and settlement of cheques.

Basis

ARTICLE 3- (1) This Regulation has been prepared based on the first and second paragraphs of Article 8 of the Cheque Law No. 5941 dated 14/12/2009.

Definitions

ARTICLE 4- (1) In this Regulation;

a) Bank: Türkiye Cumhuriyet Merkez Bankası Anonim Şirketi,

b) Participant: Banks subject to the Banking Law No. 5411 dated 19/10/2005 and the Bank,

c) Institution: Istanbul Takas ve Saklama Bankası Anonim Şirketi,

ç) Drawee participant: The participant with which the account on which the cheque is drawn is held,

d) Settlement: The fulfilment of obligations arising as a result of netting,

e) Settlement account: The account held with the Institution and used for the purpose of safekeeping funds and ensuring the settlement of transactions between participants,

f) Netting: The mutual offsetting of the receivables and debts of a participant arising from the cheque information it sends and receives, and their conversion into a single receivable or debt,

g) System: The "Cheque Clearing System" which ensures the payment of cheques between bank branches by way of account and is operated in electronic environment,

ğ) Clearing: The transmission of information regarding cheques belonging to drawee participants presented to participants to the clearing house in electronic environment, intermediation in obtaining provision, and netting transactions,

h) Clearing house: The environment in which clearing activities are carried out.

PART TWO System and Operating Principles

System

ARTICLE 5- (1) In accordance with the first paragraph of Article 8 of Law No. 5941, the clearing and settlement of cheques between bank branches shall be carried out through the System. (2) The System shall be established and operated by the Institution.

Operating principles

ARTICLE 6- (1) The activities of the Institution shall be carried out in accordance with the procedures and principles set out in this Regulation and the system rules, provided that the obligations arising from the Law No. 6493 dated 20/6/2013 on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions and the regulations made by the Bank within the scope of this Law are reserved.

System contract

ARTICLE 7- (1) The mutual rights and obligations of the Institution and the participants shall be clearly determined in the system contract. (2) Participants other than the Bank shall sign the uniform system contract prepared by the Institution.

System rules

ARTICLE 8- (1) Within the framework of the regulations set out in this Regulation, the procedures and principles regarding the functioning and practices that ensure the sound execution of clearing and settlement transactions shall be determined by the Institution in the system rules. (2) The system rules shall be notified to all participants by the Institution.

PART THREE Participation in the System and Participant Obligations

Participation in the system

ARTICLE 9- (1) Banks subject to Law No. 5411 and having accounts operating with cheques within their body shall become members of the System in the capacity of participant. (2) Banks subject to Law No. 5411 but not having accounts operating with cheques within their body may also apply for participation.

(3) For participation, measures must have been taken to establish and ensure the operability of the technical infrastructure capable of performing the transactions within the scope of this Regulation.

(4) The participation application shall be made to the Institution with the application form the content of which is determined by the Institution, the system contract signed by persons authorised to represent and bind the participant, information and documents evidencing that the conditions set out in the third paragraph have been fulfilled, a copy of the articles of association, and a notarised signature circular.

(5) The Institution may request additional information and documents regarding the participation application.

(6) For participation applications to be taken into evaluation, the information and documents specified in the fourth paragraph and other information to be requested by the Institution must be complete.

(7) In the event that the participation application contains missing information and documents, the deficiencies shall be completed within a reasonable period to be determined by the Institution.

(8) The participation application shall be evaluated by the Institution within one month following the completion of the information and documents regarding the request, and the participation date shall be notified to the relevant party in writing.

(9) In order for the bank whose participation date has been determined to be able to perform transactions in the System, it must fulfil the obligations regarding the mechanism to be determined by the Institution within the scope of Article 13 of this Regulation.

Participant obligations

ARTICLE 10- (1) The participant shall;

a) Comply with this Regulation and the rules and instructions introduced by the Institution regarding the System,

b) Allocate a sufficient number of employees having the qualification to perform daily transactions,

c) Procure all hardware and communication lines to be used for the purpose of transferring information to the System under the conditions determined by the Institution, not interrupt the maintenance and support services regarding these systems, and provide backup hardware to be used when necessary,

ç) Adapt to the System changes to be made by the Institution in order to ensure continuity in the uninterrupted and secure operation of the system within the determined periods,

d) Comply with the security policies determined by the Institution in relation to its works and transactions within the scope of this Regulation,

e) Provide the information and documents requested by the Institution regarding all kinds of transactions and technical hardware in relation to its works and transactions within the scope of this Regulation, and fulfil all changes requested to be corrected,

f) Exercise utmost care and diligence in the transactions and controls on cheques, in the transmission of cheque information, and in the implementation of all rules specified in the system rules,

g) Cover all damages and losses arising from incorrect cheque information to be sent through its own lines,

ğ) To take all measures to conclude provisioning transactions on the same day, except for the cases that prevent the execution of clearing transactions and are specified in Article 15 of this Regulation,

h) To take necessary measures to prevent the copying, modification, sale, and disclosure to third parties of software programs prepared by the Institution,

ı) To immediately notify the Institution of any matters that may disrupt the normal operation of the System, cause interruptions, or prevent the closure of the system due to its own systems,

i) To accept checks presented by their holders at their own branches on behalf of the drawee participants and to transmit the information related to these checks electronically to the drawee participant via the clearing house,

j) To make the necessary explanation on behalf of the drawee participant on the back of checks that cannot be paid due to insufficient funds in the account, in accordance with the legal provision based on which the check was printed, and for checks with other restrictions preventing payment,

k) To comply with the periods and obligations stipulated in this Regulation and the system rules regarding checks that are treated like checks with sufficient funds due to the inability to obtain provisioning,

l) In extraordinary situations that may cause disruption or halt of clearing transactions, to act within the framework of the principles and procedures prepared by the Institution under Article 14 of this Regulation regarding ensuring the continuity of clearing transactions,

m) To maintain sufficient funds to cover daily clearing deficits and to take all measures to close these deficits,

n) To deposit the amount and type of assets and/or securities requested for the mechanism to be established by the Institution in accordance with Article 13 of this Regulation, within the framework of the determined procedures and principles, and to fulfill the completion call to be made by the Institution regarding these assets within the specified period,

o) To immediately notify the Institution in writing of situations that would require the application of the provisions in the second and third paragraphs of Article 11 of this Regulation.

Termination of system membership

ARTICLE 11- (1) The memberships of participants whose institution permission or activity permission is revoked, or whose legal personality is terminated through transfer, division, or merger, or whose liquidation is completed for other reasons, shall terminate automatically.

(2) Clearing and reconciliation transactions to be conducted at the clearing house shall be carried out through participants who are authorized under the legislation or whose legal personality continues through transfer, merger, or division.

(3) The membership status of a participant whose payment and collection transactions, including the use of check accounts, are restricted shall be evaluated by the Institution.

(4) If a participant who is a member under the second paragraph of Article 9 of this Regulation wishes to leave membership, the request shall be evaluated by the Institution. A participant whose membership ends upon its own request may become a member again if it meets the conditions specified in Article 9 of this Regulation.

(5) The membership of a participant whose activity or establishment permit is revoked shall be deemed to have terminated as of the date of the decision announced by the competent authority in this regard, and measures and decisions that may cause the application of the second and third paragraphs of this Article shall be deemed to have terminated as of the date of the notification to be made immediately by the participant.

SECTION IV Principles Relating to Clearing and Reconciliation Operations

Clearing operations

ARTICLE 12- (1) In clearing houses, cheques that are not physically presented to the drawee participants and that are printed in accordance with the Communiqués published by the Bank, with their magnetic coding performed in accordance with cheque coding standards, shall be processed.

(2) The Corporation is not the paying authority for cheques. The Corporation cannot be a party to any dispute regarding the content of the information sent at any stage of the clearing operations, other than technical requirements.

(3) Information relating to cheques belonging to other participants brought to participant branches for collection by the holder shall be presented electronically to the drawee participants through the clearing house in accordance with the procedures and principles set forth in the system rules.

(4) The participant to which the cheque was presented is responsible for the timely presentation of the cheque information to the drawee participant.

(5) Cheques presented through the clearing house shall be processed by obtaining authorization from the drawee participant.

(6) Authorization transactions shall be completed on the same day.

(7) If the authorization transactions of the cheques presented through the clearing house cannot be completed, such cheques shall be processed like the corresponding cheques.

(8) In the event that drawee participants process cheques like the corresponding cheques because they cannot obtain authorization, the relevant participants shall be notified in writing by the Corporation, by the hour determined in the system rules, regarding such cheques, by specifying the participant code, branch code, account no, cheque no, cheque amount and the name of the branch presenting the cheque for collection, in order to send information to the clearing house about the cheques returned after authorization on the clearing day.

(9) If it is determined that cheques processed like the corresponding cheques because authorization transactions could not be completed will not be paid later for any reason, the drawee participant shall immediately inform the relevant participant in writing, and return transactions shall be carried out within a maximum of three business days from the date of notification.

(10) Authorization transactions shall be carried out in accordance with the principles set forth in this Regulation and the system rules.

(11) Cheques drawn by one participant in favor of another participant cannot be presented to the clearing house.

(12) Other matters and operating hours relating to clearing operations shall be determined in the system rules.

Reconciliation operations

ARTICLE 13- (1) The debt balances of the participants calculated within the framework of the principles set forth in Article 12 of this Regulation shall be sent to the reconciliation account by the indebted participants in the manner and within the time specified in the system rules.

(2) After the payments of the indebted participants are completed, the receivables of the creditor participants shall be sent by the Corporation to the relevant account of the participant.

(3) The net debt and credit balances arising from daily clearing operations are final and cannot be altered in any way.

(4) The Corporation shall establish mechanisms to be used in cases where participants fail to fulfill their obligations in the System.

(5) The procedures and principles of the mechanisms to be established shall be determined in the system rules.

Extraordinary situations

ARTICLE 14- (1) In extraordinary situations that will cause the interruption or cessation of clearing operations, the procedures and principles for ensuring the continuity of clearing operations shall be determined in the system rules.

Days on which clearing and reconciliation operations will not be performed

ARTICLE 15- (1) Clearing and reconciliation operations shall not be performed on days considered holidays pursuant to the Law on National Holidays and General Holidays No. 2429 dated 17/3/1981.

(2) Clearing shall not be performed on days when half-day work is carried out pursuant to Law No. 2429; however, reconciliation operations pertaining to the previous business day shall be carried out.

(3) Regulations may be made by the Corporation regarding cases of force majeure that partially or completely prevent the performance of clearing or reconciliation operations.

SECTION V Other Provisions

Fees and commissions

ARTICLE 16- (1) The fees and commissions to be applied to all participants by the Corporation regarding the works and transactions within the scope of this Regulation, and the times and methods of their collection, shall be determined by the Corporation taking market conditions into consideration and notified to the Bank.

Non-compliance with obligations

ARTICLE 17- (1) Within the framework of the duties assigned to it by this Regulation, the Corporation;

a) For those who do not comply with this Regulation and the regulations prepared by the Corporation,

b) For those who adversely affect clearing operations and carry risks that will jeopardize the safe and uninterrupted operation of the System,

c) For those who fail to fulfill the obligations arising from daily transactions at the specified time and thereby delay the reconciliation of the transactions,

ç) For those who fail to implement the measures taken within the framework of Article 14 of this Regulation due to extraordinary situations,

d) For those who fail to provide the information and documents requested by the Corporation regarding the works and transactions within the scope of this Regulation and fail to implement the changes requested to be corrected or made,

may take the necessary decisions regarding the participants, including a decision to partially or completely refuse to accept the cheques of the participants into the clearing houses for a period it deems appropriate.

(2) Participants whose transactions are temporarily restricted partially or completely shall be notified to the Bank.

Dispute situation

ARTICLE 18- (1) In disputes that may arise regarding the works and transactions within the scope of this Regulation, the Bank cannot be a party, and no liability can be imposed on the Bank in any way regarding the System and the operation of the System.

(2) The Corporation shall not be a party to disputes that may arise between participants or between participants and third parties in transactions carried out through the System.

SECTION VI Final Provisions

Legislation repealed

ARTICLE 19- (1) The Regulation on Interbank Clearing Houses Center published in the Official Gazette dated 25/9/1985 and numbered 18879 has been repealed.

Transitory provisions

TRANSITIONAL ARTICLE 1- (1) As of the date on which this Regulation enters into force, banks that are members of clearing houses under the Regulation on Interbank Clearing Houses shall continue to be System members without being required to meet the application condition, provided that they sign the system agreement.

(2) For banks that have signed the protocol prepared for the purpose of mutual authorization for the book settlement of checks that are not physically presented to drawee banks by banks pursuant to paragraph (B) of Article 14 of the Regulation on Interbank Clearing Houses, the provisions of the existing protocol shall remain valid until the system agreement to be prepared pursuant to this Regulation is signed. However, this period shall not exceed three months.

(3) Until the system rules are notified by the Establishment, the application of the provisions of the Interbank Clearing Houses Transactions Manual prepared pursuant to Article 18 of the Regulation on Interbank Clearing Houses that are not contrary to this Regulation shall continue.

Entry into Force

ARTICLE 20- (1) This Regulation shall enter into force on 02/07/2018.

Execution

ARTICLE 21- (1) The Governor of the Central Bank of the Republic of Türkiye shall execute the provisions of this Regulation.