Committee makes proposals to address irregularities in finance and leasing businesses

Central Bank Legal and Compliance Department Director K.G.P. Sirikumara hands over the report to Central Bank Governor Prof. W.D. Lakshman

In view of the recent developments in the finance leasing business, Central Bank Governor Prof. W.D. Lakshman 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 public, civil organisations, 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 Central Bank governor on July 7, 2020.

The committee has placed particular emphasis on the illegal and irregular activities in the finance leasing business and has identified two sets of activities in the business of finance leasing that require attention, namely, the activities of the registered finance businesses and the activities of the illegal operators.

Further, the committee has identified that the activities emanating from the aforesaid categories mainly revolve around the problems related to the recovery of possession of equipment, abuse of the terms and conditions in the finance lease agreements entered into between the lessor and lessee and 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 the amendments to the Finance Leasing Act.