Microfinance pilot scheme to launch

February 02, 2012

The Mortgage Corporation plans to launch a microfinance pilot scheme with a trial period of three years in mid-2012.
 
At the request of Financial Secretary John Tsang, the corporation formed a study group last year comprising experts from the banking industry, voluntary agencies, academia and the Government. The group examined the feasibility of establishing a sustainable microfinance scheme in Hong Kong and submitted a report to Mr Tsang.
 
It said a sustainable microfinance scheme will provide comprehensive support to help boost borrowers' credit standing so they can obtain bank loans at a relatively lower interest rate. A comprehensive support system will help borrowers develop their business plans, provide entrepreneurial training, and offer mentorship after a business launch.
 
The study group recommended the scheme be self-sustaining in the long-run. It should not operate as a social welfare hand-out and borrowers must have the willingness to repay loans. For micro-business start-up and self-employment, borrowers must present viable business plans, and should have the ability to implement them.
 
According to the preliminary framework suggested in the report, the pilot scheme should cater to those aspiring to start their own businesses, those wishing to become self-employed and those wanting to achieve self-enhancement through training, skills upgrading or securing professional certification. The maximum loan amount for each loan in these categories will be $300,000, $200,000 and $100,000, with a five-year maximum loan tenor.
 
Mr Tsang announced in yesterday's 2012-13 Budget address a request for the corporation to co-ordinate with banks, voluntary agencies and other stakeholders to conduct a sustainable microfinance pilot scheme based on commercial principles, with a tentative aggregate loan amount of $100 million. The corporation welcomed the announcement and has started preparatory work.