A lawmaker on Friday called for banks to provide as much financial assistance as possible to small and medium sized enterprises while maintaining the stability of Hong Kong's financial system.

This came after the banking industry met with the business sector earlier to understand the situations businesses face when fundraising.

Speaking on an RTHK programme, Peter Shiu said businesses are finding it more difficult to raise capital.

"Previously, if some companies had projects in mind and talked to the banks about borrowing money, the banks were very willing to lend them money. But nowadays, the banks are less willing to lend money. I believe during the approval process, banks take more time and ask businesses more questions," Shiu said.

"I understand that Hong Kong is now in its economic transformation period. A lot of industries are not meeting their expected performance targets after the pandemic, and the global economy is slow. I hope banks can help businesses in a more humane way," he added.

Shiu also said the earlier situation of businesses having their loans called in and their credit limits reduced had improved.

"Some companies took out a mortgage, or used some of their credit, but then property prices dropped these past few years, and the companies were required to bring more money to the bank or have their credit limits cut, or even being asked to take out another mortgage so they could continue to borrow from banks," he said.

He added that another meeting with the banking industry will be held later this month, in the hope of discuss more ways to help the business sector.