Featured Product

    HKMA Issues Updates on Policy Measures Intended to Ease COVID Impact

    September 21, 2021

    The Hong Kong Monetary Authority (HKMA) published updates on the policy measures that were announced in context of the ongoing pandemic. The policy updates are for the application period extension of the 100% personal loan guarantee scheme, the support measures under the small and medium-size enterprise (SME) financing guarantee scheme, and the six-month extension of the pre-approved principal payment holiday scheme.

    100% Personal Loan Guarantee Scheme. The government announced that the application period of the 100% Personal Loan Guarantee Scheme will be extended from the original expiry on October 27, 2021 to end-April 2022, so as to keep providing a supplementary financing option to individuals suffering from cessation of main recurrent incomes from employment in Hong Kong during the COVID-19 pandemic. Individuals wishing to apply can continue to contact the participating banks. The scheme has received overwhelming response since its launch on April 28, 2021 and the participating banks have received numerous enquiries and applications. As at September 10, 2021, more than 30,000 applications have been approved for a total loan amount of nearly HKD 2.1 billion, with the average loan size being about HKD 69,000. Among the approved applications, more than 80% (over 24,000 applications for a total loan amount of around HKD 1.7 billion) benefited from the principal moratorium arrangement.

    SME Financing Guarantee Scheme. The maximum duration of principal moratorium for the 80% Guarantee Product, the 90% Guarantee Product, and the Special 100% Loan Guarantee under this scheme will be extended from 18 months to 24 months while the application period for principal moratorium will also be extended to end-June 2022. The government has also announced earlier an extension of the application period of the Special 100% Loan Guarantee by six months to end-June next year. The further extension of principal moratorium under the scheme will allow borrowing enterprises to defer principal repayments for a maximum of two years. This should effectively alleviate their cash flow burden. HKMC Insurance Limited will announce implementation details of the new enhancements in about two weeks. Meanwhile, borrowers may approach lending institutions to apply for principal moratorium and/or extend the principal moratorium period under current arrangements.

    Principal Payment Holiday Scheme. HKMA and the Banking Sector SME Lending Coordination Mechanism jointly announced that the pre-approved Principal Payment Holiday Scheme will be extended for another six months to end-April 2022. All principal payments of loans falling due between November 2021 and April 2022 by eligible corporate customers will be deferred by six months except for repayments of trade loans, which will be deferred by 90 days. For loans that have been extended for 540 days or more successively since first drawdown (or trade loans that have been extended for 270 days or more successively since first drawdown), banks have the flexibility to offer different forms of suitable credit relief to help the customers ride out the current difficulties, subject to prudent risk management principles. Banks will not issue individual notifications to eligible customers regarding the deferment arrangement. Interested corporate customers may contact their banks and deferment requests will be handled on a "pre-approved" basis. As the usage of the scheme has dwindled to a low level on the back of steady economic recovery, HKMA and the Mechanism consider that planning should be made for the discontinuation of the scheme, in line with prudent risk management principles. HKMA will engage the banking industry to discuss the appropriate exit strategy, drawing reference from experience of overseas jurisdictions that are in different stages of withdrawal from pandemic relief measures. 

     

    Keywords: Asia Pacific, Hong Kong, Banking, COVID-19, Lending, Loan Guarantee Scheme, Loan Moratorium, Credit Risk, 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

    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

    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
    News

    UK Authorities Issue Regulatory and Reporting Updates for Banks

    The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.

    June 15, 2022 WebPage Regulatory News
    News

    BaFin Consults on Resolvability Requirements for Resolution Planning

    The Federal Financial Supervisory Authority of Germany (BaFin) proposed to amend the “Capital Investment Conduct And Organization Ordinance” and issued a draft circular on the minimum resolvability requirements for resolution planning.

    June 10, 2022 WebPage Regulatory News
    News

    EBA Consults on Certain Standards and Guidelines Under CRR and BRRD

    The European Banking Authority (EBA) proposed guidelines, for the resolution authorities, on the publication of the write-down and conversion and bail-in exchange mechanic, with the comment period ending on September 07, 2022.

    June 08, 2022 WebPage Regulatory News
    News

    OJK Publishes Regulatory Updates for Financial Sector Entities

    The Financial Services Authority of Indonesia (OJK) is strengthening cooperation with the Australian Prudential Regulation Authority (APRA) and the Japanese Financial Services Agency (JFSA)

    June 03, 2022 WebPage Regulatory News
    News

    EU Publishes Rules on DLT and Data Governance

    The European Parliament and the Council published Regulation 2022/868 on European data governance (Data Governance Act).

    June 03, 2022 WebPage Regulatory News
    News

    EBA Publishes Phase 2 of Reporting Framework 3.2

    The European Banking Authority (EBA) published phase 2 of its reporting framework 3.2. The technical package supports the implementation of the updated reporting framework by providing standard specifications

    June 03, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8267