The Central Bank has proposed substantial revisions to the Finance Leasing Act, signaling potential transformations in the finance leasing sector, according to senior bankers. These revisions focus on confining finance leasing operations to licensed financial institutions, such as commercial banks, specialized banks, and licensed finance companies, effectively excluding non-banking entities. This move is aimed at strengthening regulation and centralizing finance leasing within well-regulated financial entities, a shift that proponents argue will simplify oversight and bolster consumer protection.
The proposed amendments have sparked debates regarding their potential impact on competition and innovation within the sector. Critics express concerns about reduced competition, while proponents emphasize the potential for enhanced consumer safeguards. The Central Bank has invited public commentary on the issue, aligning with broader efforts towards consolidating the financial system.
Key highlights of the proposed revisions include procedural simplifications, such as the removal of detailed operating manual requirements for leasing companies during registration. The revised Act also introduces stronger protections for lessees, ensuring their right to own leased assets at the end of the lease term, provided all financial obligations are met. Additionally, the Act addresses enforcement mechanisms, penalties for unauthorized leasing activities, and outlines procedures for repossession and managing defaults or disputes, emphasizing transparency and fairness in lease agreements.