The Committee appointed to probe into finance and leasing company irregularities and illegal activities has identified that the activities of this sector mainly revolve around ten main areas.
These areas included problems related to the recovery of possession of equipment, abuse of the terms and conditions in the finance lease agreements entered into Communications Department between the lessor and the lessee, as well as certain loopholes in the provisions of the Finance Leasing Act, No. 56 of 2000.
Accordingly, the Committee recommends short term and long term proposals of which the short-term proposals are expected to address the current problems by providing more efficient solutions to the problems identified and the long-term proposals mainly focus on amendments to the Finance Leasing Act.
Short term recommendations are the prevention of the use of force in the possession of equipment, abolition of illegal leasing institutions, regulation of forms used for entering into finance lease, and creating awareness of the public and the police on finance leasing
Action will be taken to actively regulate the value paid by lessee for equipment in a finance lease 6. Issuing directions related to “substantial failure” and Issue directions defining the word “Notice” given under Section 39 of the Finance Leasing Act .
Issuing directions to specify whether a facility is a hire purchase facility or a finance lease, regulation of penal rates and regulation of valuation related to finance lease were the other recommendations.
The Governor of the Central Bank appointed a three member committee to examine and report on the irregularities and illegal activities of the finance and finance leasing businesses, and to make recommendations to curtail such activities.
In response to the request made by the Committee, more than 200 views, proposals or complaints were received from the general public, civil organizations, financial sector associations and other interested parties in the finance business and finance leasing business.
The Committee, having examined such representations, has completed the report, and the report was handed over to the Governor of the Central Bank of Sri Lanka on 07.07.2020.
The Committee has placed particular emphasis on the illegal and irregular activities in the finance leasing business and has identified two set of activities in the business of finance leasing that require attention.
Accordingly, the Committee recommends short term and long term proposals of which the short-term proposals are expected to address the current problems by providing more efficient solutions to the problems identified and the long-term proposals mainly focus on amendments to the Finance Leasing Act.
(LIN)