HKMA, banks launch new measures to boost SME financing and support

The initiative will launch five new measures.

The Hong Kong Monetary Authority (HKMA) and the banking sectors launched five new measures to support small- and medium-sized enterprises (SMEs).

First, the HKMA has lowered the countercyclical capital buffer ratio from 1% to 0.5% and will allow banks to early adopt the preferential treatments for SME exposures under the Basel III capital framework.

A dedicated fund of over $370b from the 16 banks active in SME lending will also be provided to SMEs.

In addition, banks will introduce more credit products and services, including pre-approved credit limits, unsecured loans, cross-border loans, and loans with flexible repayment periods, to meet the evolving needs of SMEs, such as digital and green transformation.

On partial principal repayment options, the HKMA noted that when an orderly exit from the banking sector’s Pre-approved Principal Payment Holiday Scheme started in July 2023, the mechanism introduced enhanced measures to assist corporates’ gradual return to normal repayment.

Lastly, banks will allocate resources to expedite applications and collaborate with HKMC Insurance to quickly implement the principal moratorium and other enhancements under the SME Financing Guarantee Scheme.

The HKMA said around 20,000 SMEs benefitted from the nine measures launched with the Banking Sector SME Lending Co-ordination Mechanism in March this year, involving an aggregate credit limit of over $44b.

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