HKMA Announces Three Month Extension of Pre-approved Principal Payment Holiday Scheme

The HKMA (Hong Kong Monetary Authority) has announced another three month extension of the Pre-approved Principal Payment Holiday Scheme until end January 2023.

The Scheme is available to all corporate customers that have annual sales turnover below HKD 800 million and that have no seriously overdue loan payments.

The Scheme took effect in May 2020 with around 100 participating banks and covers around 120,000 eligible corporate customers. It was extended in November 2020, May 2021, November 2021 and May 2022, for six months each time, to end-October 2022.

When the Scheme was first launched, about 19,000 corporate customers participated, compared to just 2,600 that participated between November 2021 and April 2022 – indicating that the economy has been recovering from the impact of the Covid-19.

Still, the external environment and the economic outlook remain "complicated and uncertain", the HKMA said, adding that some corporates are still facing pressing cash-flow pressure.

As such, the Scheme is being extended to allow the HKMA and banking sector time to decide on a way forward.

Corporate customers seeking a principal repayment holiday can have principal repayments on loans falling due between November 2022 and January 2023 deferred by six months, except for repayments of trade loans, which will be deferred by 90 days.

HKMC Insurance Limited has likewise announced that the principal moratorium arrangement under the SME Financing Guarantee Scheme (SFGS) will be extended accordingly.

Borrowers may apply for principal moratorium of up to 36 months, but the option to resume making partial principal repayment will continue to be provided, for borrowers that are willing and capable.

Source: Regulation Asia