Turkey’s banking watchdog on Tuesday fined 13 banks $4,000 (TL 50,000) each for failing to establish internal control mechanisms on time to ensure the proper use of loans extended by the lenders.

The Banking Regulation and Supervision Agency (BDDK) had earlier warned that the necessary controls should be established at the maximum level so that loans extended in the Turkish lira to the individual or corporate customers are not subject to transactions contrary to their purpose.

The BDDK handed the fines to the banks in accordance with a provision in the banking law that allows for fines between TL 50,000 and TL 500,000 in the event banks fail to comply with decisions on regulations that have been made.

In a separate development Wednesday, the BDDK said that it put into effect its new regulation for digital banks that will operate without branches. The regulation was published in the Official Gazette and is expected to enter into force on Jan. 1, 2022.

The new regulation determines the operating principles of digital banking and aims to facilitate access to banking services and increase financial inclusion, the watchdog said, describing it as a milestone in the development of the country's finance sector and fintech ecosystem, enabling banks to provide services solely through digital channels using numerous innovative business models.

Digital banks will be able to start operating in the sector from next year if they apply to the BDDK and obtain the necessary permits.