Leasing industry to turnaround in 2-3 mths
View(s):With interest rates stabilizing and major projects finding their way into the country, the leasing industry is set to bounce back from the doldrums, officials said.
“With all the new infrastructure projects which are coming in, things are looking positive and within two to three months, with all these changes happening, the industry will turn around,” D.P. Kumarage, the new Chairman of the Leasing Association of Sri Lanka told the Business Times. During the past year, the industry was undergoing issues with rising vehicle duties, exchange rate depreciation together with credit restrictions that were imposed on commercial banks (from which leasing firms borrowed the funds to lend), he added.
Government policies are in place to maintain the economic growth and this will compliment the generating of business opportunities for industries such as leasing and the development initiatives currently underway will provide demand for more services whee machinery and vehicles are involved, he said.
The leasing industry recorded a significant growth of 120 per cent in 2010/2011 and this year so far it has seen an industry made up of Registered Finance Leasing Establishments (RFLE) which is 69 entities in number. They take the forms of Specialised Leasing Companies (18), registered finance companies (35), licenced commercial banks (12) and licenced specialised banks (4).
Leasing and Hire purchase have proven to be leading sources of financing in Small and Medium Enterprises (SMEs) sector in particular and domestic and other business sectors in general over the past years, specifically for financing of fixed assets. SME and domestic sectors lack documentary evidence and additional collateral to secure credit and thus experience difficulties to obtain funds from conventional banking system, leaving, leasing companies to bridge the gap, Mr. Kumarage added.
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