The Hong Kong Monetary Authority (HKMA) on Friday rolled out new capital rules and various support measures aimed at assisting small and medium enterprises (SMEs), including HK$370 billion in dedicated funds offered by banks.

The measures include allowing banks to apply more favourable capital requirements for larger enterprises.

The new regulation, which is set to take effect in January next year, will cover businesses with annual turnover of up to HK$500 million – an increase from the previous cap of HK$100 million.

The Countercyclical Capital Buffer has also been reduced from 1 percent to 0.5 percent with immediate effect, allowing banks to lend more freely and reducing their loan costs.

The authority added that 16 banks participating in the Taskforce on SME Lending have set aside a total of over HK$370 billion in dedicated funds for SMEs.

“About that HK$370 billion dedicated funds for SMEs, that is actually more about a commitment by those banks involved in making sure that the supply of the credit will be there, but of course subject to prudent risk management,” said HKMA executive director Carmen Chu.

A deputy chief executive at the authority, Arthur Yuen, said the dedicated funds are not a static figure and can be adjusted based on market conditions.

“We will continue to discuss with the banks through the taskforce whether there's any room for further enhancing or increasing that number,” he said.

Yuen said the taskforce, established in August, has received over 100 enquiries so far, with almost half requiring no intervention.

“But the taskforce did look into the remaining 60 percent of the cases and in some of the cases it involves communications between banks and customers. Some involve the processing time. Some involve the request for documents”, Yuen said.

“Some also relate to how banks actually interact with customers when they are processing the application, whether they can smoothen some of the requests for information, et cetera. So the taskforce has been involved in sorting out some of those procedural sort of enhancements,” he said.

Yuen also said the relaunch of the principal moratorium scheme, announced in this year’s Policy Address, will provide “important breathing space” for SMEs to transition.

SMEs are entitled to the moratorium if they borrow money through the government-backed SME Financing Guarantee Scheme (SFGS).

“We talked about digital transformation and green transformation, but for SMEs to go through digital transformation and green transformation, they need time, they need continuous support from the banking industry. So having the SFGS principal moratorium re-introduced is an important breathing space for that sort of transformation process to start,” Yuen said.