Regulatory Alerts2015-01-19
Added · Updated
Compliance with existing prudential measures on property mortgage lending
The Hong Kong Monetary Authority issued this directive to correct lax lending practices identified during recent on-site examinations of authorized institutions. The regulator mandates stricter scrutiny to ensure corporate borrowers qualify as genuine operating companies rather than shell entities, and requires higher discount rates of at least 30% to 40% when calculating debt-servicing ratios from rental income. These enhanced underwriting standards must be implemented immediately to align with existing prudential measures without constituting new countercyclical policies.