Budapest, November 3 (MTI) – The National Bank of Hungary on Tuesday unveiled a package of incentives to support a return to market lending.
The package dubbed Market Credit Scheme was launched at the same time the central bank detailed the final phase of its Funding for Growth Scheme that provides banks with zero percent financing for cheap corporate loans.
The incentive scheme comprises an interest rate swap (IRS) tied to lending activity complemented by a preferential deposit, incentives affecting banks’ capital reserve requirements and access to a corporate credit information system the central bank is establishing.
The central bank will also launch a Growth Support Scheme (GSS) in January with the aim of increasing the banking sector’s lending to small and medium-sized firms by 250-400 billion forints, or around 5-10 percent of total corporate lending stock, in 2016.
The GSS comprises the final phase of the NBH’s Funding for Growth Scheme (FGS) as well as a package of incentives for active lenders.
The final part of the FGS will be divided into two pillars, each of them allocating 300 billion forints to lenders to finance cheap corporate loans.
In the first pillar, the NBH will provide lenders with zero percent financing which they can lend to businesses at an APR not exceeding 2.5 percent. Loans will be capped at 1 billion forints and may be purposed for a narrower scope than in the second phase of the FGS.
The second pillar will focus on credit for companies with foreign currency revenues. The NBH will provide zero percent forint financing to lenders combined with an FX swap element. The APR on FX loans disbursed using the financing will also be capped at 2.5 percent.