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Wednesday, Apr 14, 2021

Unpaid bank loans for jobless will be recovered, Paul Chan says

Unpaid bank loans for jobless will be recovered, Paul Chan says

The Financial Secretary Paul Chan Mo-po has defended his decision to offer a guaranteed loan scheme for the unemployed in the 2021-2022 budget, but was not clear on what – if anything – will happen to those who fail to eventually repay the borrowings, RTHK reports.
Chan was asked about the loans when he appeared on a special RTHK Radio 3 phone-in on Friday morning, two days after the budget.

Under the loan scheme, people who have been unemployed for two months or more will be able to borrow six times their last monthly salary, up to a maximum of HK$80,000. The annual interest rate will be 1 percent, and people who pay off the loan on schedule over five years will have the interest waived.
Callers asked Chan whether the government guarantee would mean people might have little incentive to repay the loan.

"(The) bank is the usual implementation agent in this particular respect. They will use their usual recovery procedures," Chan replied.

Asked by host Hugh Chiverton whether this would simply mean that the banks wrote the loan off, he replied: "The loan will be completely taken up by the government because we provide 100 percent guarantees."

Asked whether this meant that nothing would happen to those who failed to repay, Chan replied: "Not really. We need to do the usual due diligence in terms of recovery. But of course we need to be sensitive to individual situations."

Chan has faced criticism for offering support in the form of loans at a time of high unemployment, and for offering the loans only to those who've lost their jobs rather than people whose income has fallen sharply amid the pandemic.
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