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 ArticleDNB Issues Additional Data Quality Checks for Second Quarter of 2019
The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.
The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.
The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.
The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.
The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.