Hong Kong Monetary Authority orders banks to extend repayment holiday for small businesses until October

The Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, has asked all banks to extend a six-month loan repayment holiday for small businesses.

Banks must allow 120,000 qualified borrowing firms – firms with annual turnover of less than HK $ 800 million (US $ 103 million) and no seriously delinquent loans – to defer repayment of principal on loans to individuals. businesses or mortgages until October of this year, the authority said Thursday evening. Companies will only have to pay the interest due on their loans.

“Given the persistence of the Covid-19 pandemic around the world and the severity of the resulting impact on the global and local economy, some small and medium-sized businesses continue to face cash flow pressures” , said the HKMA.

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The second extension of the reimbursement leave aims to provide more respite for local businesses who were hit hard by the city’s worst economic recession on record. Hong Kong’s economy shrank 3% in the fourth quarter, causing an annual contraction of 6.1% in 2020, according to first estimates released by the Census and Statistics Department.

the six month repayment leave started in May of last year and was extended in October. The new extension means that some companies will benefit from a break in capital repayments of up to 18 months.

“The second extension of the reimbursement holiday for another six months will help Hong Kong businesses to survive as they have been hit hard by the pandemic for more than a year,” said Peter Shiu Ka-fai, a lawmaker representing the industry. wholesale and retail. . He said businesses will no longer need the support of banks once the coronavirus outbreak in Hong Kong is brought under control and cross-border traffic with mainland China is restored.

Short-term business loans will be deferred for 90 days, and banks may offer other forms of relief to borrowers if their business loans have been extended for 540 days or more. About 100 Hong Kong banks have extended loan maturities and other forms of relief in more than 59,000 cases, totaling HK $ 750 billion in January, HKMA said.

HSBC, the city’s largest bank, hailed the extension. “We will continue to provide support to our customers. HSBC has offered various relief measures to businesses of all sizes to navigate the difficult operating environment,” a spokesperson said, adding that it had granted $ 230 billion. HK dollars of payment holidays or other forms. small business relief at the end of last year.

This article was originally published in the South China Morning Post (SCMP), the most authoritative voice on China and Asia for over a century. For more SCMP stories, please explore the SCMP application or visit the SCMP Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved.

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