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    HKMA Announces Extension of PPPHS and SFGS Loan Schemes

    October 20, 2022

    The Hong Kong Monetary Authority (HKMA), together with the Banking Sector Small and Medium Enterprise (SME) Lending Coordination Mechanism, announced extension, for six months, of the Pre-approved Principal Payment Holiday Scheme (PPPHS) until the end of July 2023 and enhancement of the partial principal repayment option. In addition, HKMC Insurance Limited announced extension, by six months, of the application period for the principal moratorium arrangement under the SME Financing Guarantee Scheme (SFGS) until the end of June 2023.

    The PPPHS Scheme was extended for another six months to the end of July 2023, further to the three-month extension, to the end of January 2023, which was announced in September 2022. The scheme enables eligible corporate customers to defer the principal payments of all loans falling due between February 01, 2022 and July 31, 2023 by six months, except for repayments of trade loans, which should be deferred by 90 days. The deferment applies whether or not a loan has previously been on a principal payment holiday. The scheme will also offer a new two-year 50% principal repayment option to facilitate financially capable corporates to gradually transition to normal repayment, on top of the one-year 20% principal repayment option introduced in May 2022. Participation in partial principal repayment options remains voluntary; however, authorized institutions are expected to take active steps to encourage their customers to take up the partial principal repayment options to prepare for the eventual exit of the scheme. For trade facilities that are self-liquidating in nature, banks may require the loan to be settled when the customer has received the underlying payment. Corporate customers in need of principal repayment deferment may contact their banks and requests will be handled on a "pre-approved" basis. 

    The principal moratorium under the SFGS Scheme will be extended by six months to a total of 42 months. This will allow borrowers to apply for principal moratorium of up to 36 months. Borrowers will be provided with two options for making partial repayment, allowing borrowers to resume normal repayment gradually if they are willing and capable. Borrowers may choose to repay 20% of the original principal repayment amount monthly for one year, or repay half of the original principal repayment amount monthly for two years. Whether a borrower chooses the principal moratorium arrangement or the partial principal repayment option, the loan tenor and the guarantee period will be extended accordingly. The arrangement will come into effect from October 24, 2022.

     

     

    Keywords: Asia Pacific, Hong Kong, Banking, Lending, Credit Risk, Principal Payment Holiday Scheme, SFGS, Loan Guarantee Scheme, Basel, HKMA

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