HKMA revised the guidelines on credit risk management for personal lending business of authorized institution. The revisions are aimed to provide greater flexibility to authorized institutions in the use of new credit risk management tools powered by financial technology. The guidelines allow authorized institutions to carve out a small portion of their personal lending portfolio as New Personal-Lending Portfolio (NPP) and apply innovative credit analytic tools built on financial technology to assess and approve credit applications.
As part of the Banking Made Easy initiative, HKMA had issued the guidelines in May 2018. Several authorized institutions have since rolled out new retail credit products following the guidelines and the business has been operating smoothly. In view of this latest development, HKMA considers that it is no longer necessary to set an across-the-board limit applicable to all authorized institutions on such lending (that is, 10% of the capital base of an authorized institution). Instead, HKMA expects authorized institutions intending to develop this business to set a limit of their own, which should be commensurate with their risk appetite and risk management capability. The guidelines have, therefore, been updated and are available in the Annex to the circular.
Keywords: Asia Pacific, Hong Kong, Banking, Credit Risk, Personal Lending Portfolio, Fintech, Risk Appetite, HKMA
Previous ArticleFSI Summarizes Scope of Application of Basel Framework
Next ArticleIASB Publishes Meeting Updates for August 2019
PRA published the policy statement PS14/20, which contains the supervisory statement SS1/20 and the feedback to responses to the consultation paper CP22/19 on expectations for investment by firms in accordance with the Prudent Person Principle, or PPP, as set out in the Investments Part of the PRA Rulebook.
EBA published an opinion following the notification by the French macro-prudential authority, the Haut Conseil de Stabilité Financière (HCSF), of its intention to extend a measure introduced in 2018 on the use of Article 458(9) of the Capital Requirements Regulation (CRR).
As part of a Research Bulletin on the recent policy-relevant work, ECB published an article that examines the lessons learned from past crises for nonperforming loan resolution in the post COVID-19 period.
RBNZ published the financial stability report for May 2020. This review of the financial system in the country highlights that the economic disruption associated with COVID-19 will present challenges to the financial system.
ECB updated the guidance notes for reporting related to the statistics on holdings of securities by reporting banking groups (SHSG).
ECB published results of the financial stability review in May 2020. Among other issues, the financial stability review assesses operations of the financial system so far during the COVID-19 pandemic.
Financial policymakers and international standard-setters met virtually with private-sector executives to discuss international policy responses to COVID-19 pandemic.
ESMA published a letter responding to IASB on the exposure draft on the phase 2 of the interest rate benchmark reform.
HKMA is consulting on revisions to the Supervisory Policy Manual module CR-G-14 on margin and other risk mitigation standards for non-centrally cleared over-the-counter (OTC) derivatives transactions.
EBA published thematic note presenting a preliminary assessment of the impact of COVID-19 outbreak on the banking sector in EU.