The Hong Kong Monetary Authority (HKMA), in collaboration with the banking sector, announced several measures to support small and medium-sized enterprises (SMEs) in their development, upgrade, and transformation.
Aimed at enhancing competitiveness and productivity, these initiatives come as SMEs navigate changing market conditions.
Since launching nine SME support measures in March, approximately 20,000 SMEs have benefited, involving a total credit limit of over HK$44 billion, according to the announcement.
The HKMA has engaged with more than 50 trade associations to understand the challenges faced by SMEs across various sectors.
Recognizing the need for SMEs to adapt to evolving market dynamics, the HKMA and the banking sector are implementing five new measures.
Firstly, the HKMA has lowered the countercyclical capital buffer ratio from 1% to 0.5% and will allow banks to early adopt preferential treatments for SME exposures under the Basel III capital framework.
This move releases bank capital, enabling banks to meet the financing needs of SMEs.
Secondly, sixteen banks active in SME lending have set aside over HK$370 billion in dedicated funds.
These funds will provide necessary financing to help SMEs navigate the changing business environment, with banks regularly reviewing and potentially increasing the fund size.
Thirdly, banks will introduce more credit products tailored to SMEs’ transformation needs, including pre-approved credit limits, unsecured loans, cross-border financing, and flexible repayment options.
To support digital transformation, banks will offer e-commerce financing and electronic payment services, aiding SMEs in utilizing data and adopting innovative business solutions.
For green transformation, banks will consider launching advisory services and collaborating with green certification agencies to support SMEs in low-carbon transitions, providing green loans for purchasing and adopting low-carbon equipment.
Fourthly, banks will offer more accommodating repayment arrangements to assist SMEs facing challenges during economic transformation.
Options include extending the duration of partial principal repayments, adjusting repayment proportions, or offering principal moratoriums.
These arrangements also apply to loans for taxis, public light buses, and commercial vehicles taken out by individual customers.
Lastly, banks will allocate sufficient resources to process applications and work closely with HKMC Insurance Limited to implement enhanced measures under the SME Financing Guarantee Scheme, including principal moratoriums.
The HKMA will continue to engage with banks and the commercial sector through the Banking Sector SME Lending Coordination Mechanism and the Taskforce on SME Lending.
Seminars and activities will be organized to promote SME services, products, and schemes offered by the banking sector, aiming to assist SMEs in continuous development and transformation.
Established by the HKMA in October 2019, the Banking Sector SME Lending Coordination Mechanism includes 11 banks most active in SME lending, the Hong Kong Association of Banks, and HKMC Insurance Limited.