The Hong Kong Monetary Authority and the banking industry have launched a number of measures to support the development, upgrading and transformation of SMEs

The Zhitong Finance App learned that today (October 18), the Hong Kong Monetary Authority, together with the banking industry, launched a number of measures to further support the sustainable development of SMEs in terms of capital and banking products and services, and help them develop new businesses and markets. The Hong Kong Monetary Authority and the banking industry will introduce five measures: 1. Release bank capital to facilitate the financing needs of SMEs; 2. Reserve special funds to support SMEs; 3. Launch more credit products and services to help SMEs transform; 4. Add more “partial repayment” arrangement options; 5. Invest sufficient manpower and resources to implement the optimization measures of the “SME Financing Guarantee Scheme” as soon as possible.

According to reports, since the Hong Kong Monetary Authority launched nine measures to support SMEs in conjunction with the “Banking SME Loan Coordination Mechanism” (Coordination Mechanism) in March this year, a total of 20,000 SMEs have benefited, involving credit lines of over HK$44 billion. The Hong Kong Monetary Authority has also been meeting with more than 50 different industry associations and their members through various channels and platforms, including the “SME Financing Task Force” set up in August this year to better understand the challenges and needs faced by different SMEs.

After listening to the opinions of the business community, the Hong Kong Monetary Authority will launch the following five measures with the banking industry to help SMEs continue to develop, upgrade and transform, and enhance their competitiveness and productivity to meet various operational challenges:

1. Release bank capital to facilitate the financing needs of SMEs: The Hong Kong Monetary Authority lowered the countercyclical buffer capital (CCyB) ratio from 1% to 0.5% and allowed banks to implement preferential capital requirements for SME loans under the Basel III Agreement early, thereby freeing up banks' capital and allowing banks to use this additional capital to support the credit needs of SMEs.

2. Reserve special funds to support SMEs: 16 banks active in SME loans have set aside a total of over HK$370 billion in SME special funds in their loan portfolios to facilitate SME customers to obtain the financing they need to cope with the changing business environment. Banks will also regularly review and consider increasing the size of special funds in response to the needs and development of SMEs.

3. Launch more credit products and services to help SMEs transform: Banks promise to launch more credit products and services to meet the transformation of SMEs, including pre-approved credit lines, unsecured loans, cross-border loans, and credit products with flexible repayment terms.

In terms of digital transformation, banks will enable SMEs in different industries such as retail, catering and trade to make better use of data and adopt innovative business solutions by providing e-commerce financing and electronic payment services to enhance marketing, simplify business processes, and save operating costs.

In terms of green transformation, banks will actively consider launching relevant consulting services and cooperate with green certification bodies to reduce the cost of applying for green certification, support SMEs to implement low-carbon transformation, and also provide green loans to help them purchase and adopt low-carbon equipment to reduce their own carbon emissions, and transform into green suppliers.

4. Add more “partial repayment” arrangement options: When the banking industry's “pre-approval and non-repayment” plan begins an orderly settlement procedure in July 2023, the coordination mechanism introduced optimization measures to help the enterprises concerned gradually return to normal repayment. Considering that some clients' “partial repayment” arrangements will expire in early 2025, banks promise to be inclusive and provide these corporate customers with more flexible repayment arrangements in accordance with prudential risk management principles, such as extending the “partial repayment” option period, providing more “partial repayment” options with different repayment ratios and time frames, or even non-repayment arrangements to help them meet the challenges of the economic transition period. The above arrangements also apply to loans for taxis, minibuses and commercial vehicles made in the name of individuals.

5. Invest sufficient manpower and resources to implement the optimization measures of the “SME Financing Guarantee Plan” as soon as possible: banks will properly allocate resources to handle application cases, actively cooperate with Hong Kong Insurance Company Limited, and implement the “repayment and non-repayment” arrangement under the “SME Financing Guarantee Scheme” and other optimization measures as soon as possible.

The Hong Kong Monetary Authority stated that it will continue to understand the bank's SME business strategies, and will also maintain close ties with the banking and business community through coordination mechanisms and task forces, hold seminars and other events to promote the banking industry's services, products and plans to support SMEs in all walks of life, and work together to support the continuous development and upgrading of SMEs.