Regulatory Alerts2020-04-06
Added · Updated
Regulatory Treatment for 100% Loan Guarantee Product under SME Financing Guarantee Scheme
The Hong Kong Monetary Authority issued this circular to define the regulatory treatment for authorized institutions participating in the Government's 100% loan guarantee scheme for SMEs. The Authority permits banks to deduct guaranteed amounts from exposure limits, treat the Government's counter-guarantee as credit risk mitigation for capital adequacy purposes, and classify these loans as secured for risk management. Furthermore, the HKMA exempts participating institutions from standard credit assessment requirements, considering residual credit risk minimal due to the subsequent transfer of loans to the Hong Kong Mortgage Corporation without recourse.