A special loan scheme for small and medium-sized local firms has seen the city's bad loan rate rise to 13.5 percent and maintain an upward trend, according to the Hong Kong Monetary Authority.

HKMA deputy chief executive Howard Lee Tat-chi revealed the data at the Legislative Council’s meeting today and said that the authority will carefully manage the bad loans of the Special 100 percent Loan Guarantee under the SME Financing Guarantee Scheme.

Lee said the loans will be pursued in the event of malicious defaults. He also hopes that the rising default trend will be slowed down.

As of January 15, about 42,000 applications have been approved for the scheme's 80- and 90 percent loan guarantee products, involving a total amount of HK$145.4 billion.