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
BCBS amended the guidelines on sound management of risks related to money laundering and financing of terrorism (ML/FT).
US Agencies (Farm Credit Administration, FDIC, FED, FHFA, and OCC) finalized changes to the swap margin rule to facilitate implementation of prudent risk management strategies at banks and other entities with significant swap activities.
PRA published a letter that builds on the expectations set out in the supervisory statement (SS3/19) on enhancing banks' and insurers' approaches to managing the financial risks from climate change.
EBA finalized the guidelines on treatment of structural foreign-exchange (FX) positions under Article 352(2) of the Capital Requirements Regulation (CRR).
FSB published a statement on the impact of COVID-19 pandemic on global benchmark transition.
IAIS published the list of Internationally Active Insurance Groups (IAIGs) publicly disclosed by group-wide supervisors.
FED has temporarily revised the reporting form on consolidated financial statements for holding companies (FR Y-9C; OMB No. 7100-0128).
EC launched a consultation on the review of the key elements of Solvency II Directive, with the comment period ending on October 21, 2020.
ECB launched a consultation on the guide that sets out supervisory approach to consolidation projects in the banking sector.
IAIS published technical specifications, questionnaires, and templates for 2020 Insurance Capital Standard (ICS) and Aggregation Method data collections.