HKMA announced certain enhancements to the 100% Loan Guarantee Product under the Small and Medium-Sized Enterprise (SME) Financing Guarantee Scheme. The total guarantee commitment of the Special 100% Loan Guarantee under the Scheme is being increased to HKD 50 billion. The maximum loan amount per enterprise is being increased to HKD 4 million and the principal moratorium arrangement is being extended to the first 12 months. The Special 100% Loan Guarantee will start receiving applications from next Monday (April 20) and the application period is being extended to one year.
In the SME Financing Guarantee Scheme, which is being administered by the HKMC Insurance Limited (HKMCI), the government will provide 100% loan guarantee for the announced total loan guarantee commitment amount. Earlier this month, HKMA had also outlined the expected treatment of these loans under the Banking (Exposure Limits) Rules (BELR) and the Banking (Capital) Rules (BCR). A participating authorized institution is expected to check the eligibility of the applicants based on the established criteria specified under the 100% Scheme and the loans will be transferred by the participating authorized institution as loan owner to The Hong Kong Mortgage Corporation Limited shortly after they are created without recourse. HKMA, therefore, considers that the residual credit risk exposure of the authorized institution should be very minimal and that the regulatory requirements on credit assessment and credit risk management, as set out in the SPM module CR-G-2, do not apply to loans granted by an authorized institution under the 100% Scheme.
Keywords: Asia Pacific, Hong Kong, Banking, Credit Risk, Guarantee Scheme, SME, HKMCI, BELR, Regulatory Capital, COVID-19, HKMA
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