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Central Finance Co. Ltd Managing Director Eranjith Wijenaike called upon the Government to introduce a national policy on leasing that would encourage leasing and ensure that tax and other regulations do not discriminate leasing against any other method of financing productive equipment.

The Government should recognise leasing as a development mechanism particularly suitable for the small and medium-sized enterprises (SMEs) sector and towards that end, identify and promote the infrastructure necessary to support the industry, he said.

In this respect, we are encouraged that the Ministry of Enterprise Development with the Asian Development Bank (ADB) have taken the initiative of formulating a Secured Transaction Act to improve the ability of SMEs to access credit. The Act would entail the creation of a central registry to record the security interest of a lender, thus paving the way for leasing of movables where the risk of multiple financing has hampered the leasing of plant, machinery and inventory, he said.

The existence of a regulated industry with lease penetration rates (share of leasing in private capital formation) approaching those of developed countries makes it important that the Government formulates a national policy on leasing. This would to a great extent ease the impediments faced by the industry such as:

Ad hoc and discriminatory tax treatment of leases delays in Court procedure compelling lessors to rely on general recovery process

Discrimination between loans and leases as a method of financing in priority sectors,Lack of Government awareness and support to use leasing as an option for public sector financing Absence of a developed asset disposal mechanism to support re-sale values of specialised equipment Mandatory registration under the Finance Leasing Act came into effect from August 2002 and ensures that the industry functions within a regulated framework. Apart from minimum capital requirements to commence business, the activities of registered entities are monitored regularly through mandatory reporting to the CBS, he said.

Fifty institutions have obtained registration under the new law, but there still remain a number of market participants operating outside the law. It is therefore vital that authorities ensure regulation is evenly applied so that no particular group is at a permanent disadvantage.

Some salient facts relating to last year's performance of Central Finance had been shareholder funds standing at Rs. 2.3 Billion, an increase of 10 % over the previous year.

The total weighted capital ratio as at year-end was 18.54%, well above the recommended norm of 10%, which came into effect from July 1, 2003.

At the end of the year 2002 there were 26 registered Non-Banking Financial Institutions holding deposits aggregating Rs. 28.6 billion. The Company holds 28.67% of the Market Share of these deposits with a value of Rs. 8.2 Billion.

The company pursued vigorously, another aspect of our social responsibility program by providing training and employment opportunities to unemployed graduates through the 'Taruna Aruna' program. We continue to be a leading partner in this program - with a justifiably proud record of training 110 graduates over the past few years. As much as 35 of these graduates have been absorbed into our permanent cadre, while a majority of others have found gainful employment elsewhere, he said.

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