The Hong Kong Monetary Authority - Pre-approved Principal Payment Holiday Scheme

The Hong Kong Monetary Authority (“HKMA”), together with the Banking Sector SME Lending Coordination Mechanism had launched a Pre-approved Principal Payment Holiday Scheme (the “Scheme”) for eligible corporate customers. The launch date of the Scheme was 01 May 2020 (the “Launch Date”), as per the HKMA press release dated 17 April 2020. The key features of the Scheme are as follows:

• Corporate borrowers that have an annual sales turnover of HK$800 million or less based on their latest financials, that have no outstanding loan payments overdue for more than 30 days, and are not in the process of ceasing operations or declaring bankruptcy or liquidation, are eligible for the Scheme.
  
  
• All principal payments of bilateral loans falling due within 6 months from the Launch Date for eligible borrowers will be pre-approved for deferment. Principal payments of bilateral loans (including revolving facilities) will generally be deferred by 6 months, whereas trade facilities (except for facilities which are self-liquidating in nature) will be deferred by 3 months.
  
  
• The Scheme does not cover syndicated loans or loans used for financing purchases of shares or other financial assets.

On 05 August 2020, the HKMA together with the Banking Sector SME Lending Coordination Mechanism announced an extension of the 90-day repayment deferment for trade facilities under the Scheme. This deferment covers,

• Trade loans both currently subject to the Scheme as well as those drawn between 01 May 2020 to 31 July 2020 with no outstanding payments overdue for more than 30 days as on 1 August 2020;
  
  
• And self-liquidating facilities. For such facilities, the loan will be settled when the underlying payment has been received by the customer.

The Scheme was further extended by HKMA together with Banking Sector SME Lending Coordination Mechanism on 02 September 2020 for another six months till April 2021. All loan principal payments of eligible customers falling due between November 2020 and April 2021 were deferred by six months except for repayments of trade loans, which were deferred by 90 days. The deferment applied whether or not a loan had been on a principal payment holiday

On 29 January 2021, the HKMA together with the Banking Sector SME Lending Coordination Mechanism announced a further 90-day repayment deferment for trade facilities under the Scheme. The repayments of trade facilities falling due between 1 February and 30 April 2021 as well as those drawn down from November 2020 to 31 January 2021 were deferred by another 90 days.

On 04 March 2021, the HKMA together with the Banking Sector SME Lending Coordination Mechanism announced that all principal payments of loans falling due between 01 May and 31 October 2021 by eligible corporate customers will be deferred by another six months except for repayments of trade loans, which will be deferred by 90 days.

On 15 July 2021, the HKMA together with the Banking Sector SME Lending Coordination Mechanism announced a 90-day repayment deferment for trade facilities under the Scheme until the end of October 2021. The deferment covers trade loans both currently subject to the Scheme as well as those drawn between 01 May 2021 and 31 July 2021 by eligible customers with no outstanding payments overdue for more than 30 days as on 01 August 2021.

On 21 September 2021, the HKMA together with the Banking Sector SME Lending Coordination Mechanism announced that the Scheme will be extended for another six months to end-April 2022. All principal payments of loans falling due between 01 November 2021 and 30 April 2022 by eligible corporate customers will be deferred by six months except for repayments of trade loans, which will be deferred by 90 days.

On 11 January 2022, the HKMA together with the Banking Sector SME Lending Coordination Mechanism announced a further 90-day repayment deferment for trade facilities under the Scheme until the end of April 2022. The 90-day extension will cover existing trade loans under the Scheme which will fall due between 1 February and 30 April 2022, as well as new trade loans drawn between 1 November 2021 and 31 January 2022 by eligible customers.

On 23 February 2022, the HKMA together with the Banking Sector SME Lending Coordination Mechanism announced that the Scheme will be extended for another six months to the end of October 2022. The principal repayments on loans falling due between May and October 2022 shall be deferred by six months except for repayments of trade loans, which will be deferred by 90 days. The Scheme will also offer an option for corporates to repay 20% of the original principal repayment amount over a period of one year on a voluntary basis to those customers who are financially capable and willing to resume principal repayment gradually.

On 19 July 2022, the HKMA together with the Banking Sector SME Lending Coordination Mechanism announced a further 90-day repayment deferment for trade facilities under the Scheme. The 90-day extension will cover existing trade loans under the Scheme which will fall due between 1 August and 31 October 2022, as well as new trade loans drawn between 1 May and 31 July 2022 by eligible customers.

On 16 September 2022, the HKMA together with the Banking Sector SME Lending Coordination Mechanism announced that the Scheme will be extended for another three months to the end of January 2023. The principal repayments on loans falling due between November 2022 and January 2023 deferred by six months except for repayments of trade loans, which will be deferred by 90 days.

On 20 October 2022, the HKMA together with the Banking Sector SME Lending Coordination Mechanism announced that the Scheme will be extended by further six months to the end of July 2023, and introduced an enhancement to the partial principal repayment option. The principal repayments on loans falling due between 01 February 2023 and 31 July 2023 shall be deferred by six months except for repayments of trade loans, which will be deferred by 90 days.

On 27 April 2023, the HKMA together with the Banking Sector SME Lending Coordination Mechanism announced that the Scheme will be extended by further 90-days to the end of July 2023, when the whole Scheme will expire. This repayment deferment applies only to existing trade loans under the Scheme. Existing trade loans under the Scheme falling due between May and July 2023 can be extended by a further 90 days.

On 11 July 2023, the HKMA together with the Banking Sector SME Lending Coordination Mechanism, has decided to commence an orderly exit from the Scheme when it expires at the end of July 2023. As the cash flow conditions of some corporates are yet to fully recover, the existing partial principal repayment options will be further enhanced to facilitate a gradual transition to normal repayment for corporates currently participating in the principal moratorium under the Scheme. The specific treatments for different types of loans under the further enhanced partial principal repayment options are set out below:

• For instalment loans, including mortgage loans and commercial vehicle loans, corporates may choose to repay 20% of the original principal repayment amount, with the duration extended from 12 to 18 months; or 50% of the original principal repayment amount, with the duration extended from 24 to 30 months.
  
  
• For trade facilities, loans with bullet payment falling due within 12 months and outstanding balances of revolving facilities, the Bank may allow the borrowers to repay the amount due by regular instalments (e.g. monthly or quarterly) over 24 months. For trade facilities which are self-liquidating in nature, the Bank may require the loan to be settled when the underlying payment has been received by the customer.

For the avoidance of doubt, loans which have been extended successively for 540 days or more since the first drawdown (or trade loans which have been extended successively for 270 days or more since the first drawdown) are also eligible for the partial principal repayment options.

All other terms of the Scheme as stated in the HKMA’s circular dated 17 April 2020, 05 August 2020, 02 September 2020, 29 January 2021, 04 March 2021, 15 July 2021, 21 September 2021, 11 January 2022, 23 February 2022, 19 July 2022, 16 September 2022, 20 October 2022 and 27 April 2023 would continue to apply.

For questions regarding the scheme, please contact us at:

Email: hkcorporatecare@icicibank.com (Please mention subject as “Pre-approved Principal Payment Holiday Scheme – Name of the Company”)

Phone: +852- 22342639/42 (service hour: Mon – Fri 9am – 6pm)