Featured Product

    HKMA Announces Repayment Deferment Under Payment Holiday Scheme

    August 05, 2020

    HKMA, together with the Banking Sector Small and Medium-Size Enterprise (SME) Lending Coordination Mechanism, announced a ninety-day repayment deferment for trade facilities under the Pre-approved Principal Payment Holiday Scheme. This deferment should cover trade loans currently subject to the Scheme as well as those drawn between May 01, 2020 to July 31, 2020 by eligible customers with no outstanding payments overdue for more than 30 days, as at August 01, 2020. For facilities that are self-liquidating in nature, authorized institutions may require the loan to be settled when the underlying payment has been received by the customer. All other terms of the Scheme—as stated in the Annex to the HKMA circular on April 17, 2020—shall continue to apply.

    The Pre-approved Principal Payment Holiday Scheme, effective from May 01, 2020, has helped alleviate cash-flow pressure faced by corporates, particularly SMEs. Taken together with other corporate relief initiatives rolled out by banks, as at end-June, more than 42,000 principal payment holidays or other forms of relief have been granted, amounting to more than HKD 500 billion. Since the launch of the Scheme in May 2020, the take-up rate has ranged between 10% to 20%. As such, HKMA, in consultation with the Mechanism, considers that rather than requiring authorized institutions to inform all eligible customers with trade loans of the extension, customers in need of relief should contact their authorized institutions to request the detailed terms of the ninety-day deferment, including the financial implications. In some cases, authorized institutions may need updated financial or business information from customers; however, they should handle the requests from all enquiring customers on a pre-approved basis.

    HKMA mentioned that this extension of the Scheme will not by itself render a trade loan to be downgraded, nor will it cause the loan to be categorized as “rescheduled” as long as the terms of the extension are “commercial.” This principle applies whether or not the trade loan is already on a payment holiday. Borrowers who are unable to meet the restructured payment schedule should continue to be recognized in a timely manner and the classification of their loans should reference the HKMA guideline on loan classification system as well as previously issued frequently asked questions (FAQs). HKMA will continue to engage banks and commercial sectors through the Mechanism and expects to arrive at a decision, as soon as possible, regarding follow-up arrangements for the Scheme, which will end in October.

    Keywords: Asia Pacific, Hong Kong, Banking, COVID-19, SME, Principal Payment Scheme, Loan Classification, Credit Risk, Payment Deferrals, Payment Holiday, HKMA

    Featured Experts
    Related Articles
    News

    EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models

    The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.

    June 21, 2022 WebPage Regulatory News
    News

    EP Reaches Agreement on Corporate Sustainability Reporting Directive

    The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).

    June 21, 2022 WebPage Regulatory News
    News

    PRA Consults on Model Risk Management Principles for Banks

    The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.

    June 21, 2022 WebPage Regulatory News
    News

    EC Regulation Amends Standards for Calculating Credit Risk Adjustments

    The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    June 21, 2022 WebPage Regulatory News
    News

    HKMA Announces Launch of Data Repository on Sustainable Finance

    The Hong Kong Monetary Authority (HKMA) announced that the Green and Sustainable Finance (GSF) Cross-Agency Steering Group has launched the information and data repositories and outlined the progress made in advancing the development of green and sustainable finance in Hong Kong.

    June 21, 2022 WebPage Regulatory News
    News

    BIS Hub Updates Work Program for 2022, Announces New Projects

    The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.

    June 17, 2022 WebPage Regulatory News
    News

    EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.

    June 17, 2022 WebPage Regulatory News
    News

    NGFS Report on Integration of G-Cubed Model into NGFS Scenarios

    The Network for Greening the Financial System (NGFS) published a report that explores the feasibility of integrating the G-Cubed general equilibrium model into the NGFS suite of models.

    June 17, 2022 WebPage Regulatory News
    News

    US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule

    Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)

    June 16, 2022 WebPage Regulatory News
    News

    EIOPA Consults on Review of Securitization Framework in Solvency II

    The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.

    June 16, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8301