In light of the challenges brought about by the COVID-19 outbreak to the economy and operations of corporates, the HKMA together with the Banking Sector SME Lending Coordination Mechanism (Mechanism) announced on 17 April 2020 the launch of a Pre-approved Principal Payment Holiday Scheme for eligible corporate customers (the Scheme) on 1 May 2020. Under the Scheme, banks in Hong Kong will offer principal payment holidays to covered corporate borrowers on a pre-approval basis. The Scheme has been extended in November 2020, May 2021, November 2021, May 2022, November 2022 and February 2023 to end-July 2023.
Under the announcement on 20 October 2022, to facilitate financially capable corporates to gradually transition to normal repayment, the Mechanism will enhance the partial principal repayment option introduced in May 2022. A two-year 50% principal repayment option will be offered under the Scheme, on top of the existing one-year 20% principal repayment option.
Launch Date
1 May 2020
Am I an eligible customer for the Scheme?
Covered borrowers are corporate borrowers which:
- have, on an entity basis, an annual sales turnover of HK$800 million or less, based on their latest financial statements;
- with no outstanding loan payments payable to the bank which have been overdue for more than 30 days at the Launch Date; and
- are not in the process of ceasing operations or declaring bankruptcy or liquidation.
The HKMA requests all banks to participate in the Scheme. Customers may contact their banks to enquire about their eligibility.
Contact list of banks
What are the payments covered under the Scheme?
- All loan principal payments, including mortgages, vehicle loans and trade facilities, of eligible customers falling due within the Scheme period will be pre-approved for deferment1. Principal payments of loans will generally be deferred by 6 months.
- Under the announcement on 23 February 2022, all principal payments of loans falling due between May and October 2022, irrespective of whether or not a loan has been on a principal payment holiday, will generally be deferred by another six months.1
- Under the announcement on 16 September 2022, all principal payments of loans falling due between November 2022 and January 2023, irrespective of whether or not a loan has been on a principal payment holiday, will generally be deferred by another six months.1
- Under the announcement on 20 October 2022, all principal payments of loans falling due between February 2023 and July 2023, irrespective of whether or not a loan has been on a principal payment holiday, will generally be deferred by another six months.1
- For trade facilities, given their short-term nature, the principal repayment will be deferred by 90 days.
- Under the announcement on 23 February 2022, the repayments of trade facilities falling due between May and October 2022 will be deferred by another 90 days.2
- Under the announcement on 19 July 2022, the repayments of trade facilities falling due between August and October 2022 as well as those drawn down from May 2022 to the end of July 2022 will be deferred by another 90 days.2
- Under the announcement on 16 September 2022, the repayments of trade facilities falling due between November 2022 and January 2023 will be deferred by another 90 days.2
- Under the announcement on 20 October 2022, the repayments of trade facilities falling due between February 2023 and July 2023 will be deferred by another 90 days.2
- Under the announcement on 27 April 2023, existing trade facilities under the Scheme falling due between May and July 2023 can be extended by a further 90 days.2
- For revolving facilities that are due for credit review before 31 July 2023, the bank should not adjust downward the existing facility limits within six months from the review dates.
- Syndicated loans or loans used to financing purchases of shares or other financial assets are not covered.
- For trade facilities which are self-liquidating in nature, banks may require the loan to be settled when the underlying payment has been received by the customer during the extended deferment period.
Resume partial repayment on a voluntary basis
Under the announcement on 23 February 2022, corporate customers currently participating in the Scheme may, at any time, opt to start to resume partial repayment of the original principal repayment amount on a voluntary basis. In principle, borrowers can resume repaying 20% of the original principal repayment amount over a period of one year. Under the announcement on 20 October 2022, a two-year 50% principal repayment option will be offered under the Scheme. The specific treatments of different types of loans are set out below:
- For instalment loans, such as mortgage loans and commercial vehicle loans, customers may start to repay 20% of the original principal repayment amount for one year, or 50% of the original principal repayment amount for two years. Customers currently participating in the 20% principal repayment option may, when the one-year period expires, choose to continue to repay 20% of the principal for another one year, or to transition anytime to the 50% principal repayment option for two years. Referencing past practice, the loan tenor should generally be extended correspondingly. Banks should apply the same treatment to commercial vehicle loans taken out by personal customers.
- For trade facilities, loans with bullet payments falling due within one year and outstanding revolving facilities, banks may discuss with customers having regard to the actual circumstances and allow them to repay the amount due by regular instalments over a period of two years.
Banks may tailor-make a specific partial principal repayment arrangement for a particular customer, so long as the terms of the partial principal repayment arrangement are no less favourable than the aforesaid partial principal repayment options and are accepted by the customer, unless the customer explicitly asks for a less favourable arrangement taking into account its own circumstances.
How to apply?
In regards to the extension of principal payment holidays, banks will not issue individual notifications to eligible customers regarding the extension of the Scheme. Corporate customers in need of relief are requested to contact their banks. Banks may request customers (especially those who have been granted multiple extensions of payment holidays) to provide up-to-date business and financial information to better understand their needs when processing their cases.
Enquiries or feedback
For any enquiries or feedback for the Scheme, you may contact the HKMA's dedicated email account: ppphs@hkma.gov.hk or enquiry hotline: (852)2878 1199.
1 For loans which have been extended for 540 days or more successively since first drawdown, banks have the flexibility to offer different forms of suitable credit relief to help the customers ride out the current difficulties, subject to prudent risk management principles.
2 For trade loans which have been extended for 270 days or more successively since first drawdown, banks may adopt a flexible approach and consider whether other forms of relief are more suitable to help the customers ride out the current difficulties on a case-by-case basis, subject to prudent risk management principles.
