MNB to raise FGS cap by HUF 100 bln

MNB

The Monetary Council of the National Bank of Hungary (MNB) yesterday decided to raise the limit of the ongoing third phase of its Funding for Growth Scheme (FGS) by HUF 100 billion, the MNB announced on its website.

The raise will affect the limit for forint loans, which will increase to HUF 400 bln. The limit for FX loans will remain at HUF 300 bln. 

Rate-setters decided to phase out FGS more cautiously than earlier planned, meeting a request by the Hungarian Banking Association and because of the need to support economic growth, the MNB said, adding that it still considers the reinstatement of market lending important, aided by its market lending program, and maintains its intention to gradually phase out the FGS.  

The Bank said the association recently asked the MNB to raise the limit on forint loans by HUF 100 bln after loan commitments under FGS were reached at several banks.  

The MNB noted that Hungarian banks had aimed to raise SME lending by HUF 200 bln this year with the signing of the central bankʼs lending-linked interest swaps in the first quarter. Raising the limit for FGS will help SME lending stock increase as expected by 5-10% this year, it said. 

The FGS will wind up at the end of this year. In the first two phases of FGS between the summer of 2013 and the end of 2015, some 31,000 businesses have availed of approximately HUF 2.126 trillion in cheap credit available under the scheme. 

Under the FGS, the MNB provides zero-interest refinancing to banks which they can lend to SMEs at an APR not exceeding 2.5%.  

The Hungarian Banking Association welcomes the National Bank of Hungaryʼs (MNB) raising of the limit for the third phase of the Funding for Growth Scheme, the Banking Association told MTI yesterday. 

The Banking Association said overcoming the still perceivable after-effects of the economic crisis necessitates the expansion of the Funding for Growth Scheme adopted by the Monetary Council today. Bank loan placements based on central bank and government programs support the sustainable growth of the Hungarian economy, they added. 

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