HKMA Instructs Hong Kong Banks to Defer Repayments
Loan repayment deferrals of three to six months will be made available to Hong Kong’s small and medium-sized enterprises, as per the instructions of the local central bank.
The Hong Kong Monetary Authority told all 162 banks in the city to provide 6-month deferrals for principal permeant of loans and 3-month deferrals for trade facilities, according to a statement. The initiative does not cover syndicated loans or loans used to buy financial assets.
SMEs were defined as corporates with an annual turnover of HK$800 million or less which applies to an estimated 80 percent of all corporate borrowers in Hong Kong.
Business Support
Recently, the government has introduced a series of measures to support businesses ranging from 100 percent guarantee of SME loans of up to $520,000; partial coverage of staff costs; and other financial relief measures that have benefited 9,000 SMEs.
The latest «Payment Holiday Scheme» for corporate borrowers will further support the SME sector of which 40 percent are expected to see earning plunge 75 percent or more in the next year, according to a recent survey.
«In light of the economic challenges brought about by the COVID-19 outbreak, the banking sector considers it essential for the Scheme to be implemented quickly in order to alleviate the cash-flow pressure faced by corporate customers,» the HKMA added.
