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Saturday March 2nd, 2024

Sri Lanka President orders police to halt seizing of defaulted lease assets

ECONOMYNEXT – Sri Lanka’s President Gotabaya Rajapaksa has ordered police to stop leasing companies from re-posseing defaulted leases after a three-wheeler owner was allegedly beaten to death by workers employed by a leasing company.

Sri Lanka’s legal finance and leasing companies meanwhile said in a statement that the incident did not relate to any regulated firm but an unauthorised money lending company.

Under a leasing contract, finance leased assets are technically belong to the leasing company and is transferred to the user after full payment of the loan at a nominal cost such as one rupee.

The ability to easily re-possess a vehicle allowed people with no assets, family wealth or an established good credit record, who therefore could not get a loan from a bank, to get vehicle lease with lower risks to deposits of leasing and finance companies.

Vehicles of defaulted leases are re-possessed by leasing companies by ‘seizures’ who follow the vehicle on the road and drive it away when the owner parks it using a key they already have, when defaulted lessees do not voluntary return the vehicle for auction.

Police are then informed that the vehicle is not stolen.

Leases are structured in such a way that capital is recovered later in the contract.

The President’s office said the methods used to recover leases were ‘unlawful’ and was also against a circular issued by President’s Secretary P B Jayasundera on March 23, 2020 halting re-possession for six months as part of a debt moratorium ordered for Covid-19 relief.

“As the method adopted by the leasing companies to seize vehicles of those who had failed to pay their loan installments is unlawful, no room should be left to continue this practice, President Gotabaya Rajapaksa has ordered the Police,” a statement from the President’s office said.

“In this context, seizing of vehicles for not paying the installment is a breach of the Government order,”

“President informed the Police not to allow vehicles to be seized on the ground of non-payment of installments”.

Leasing companies inform police that a vehicle had been seized and not stolen.

“Leasing companies do not inform the Police prior to such seizing” the President’s office said.

“They lodge complaints only after taking over the vehicle. This kind of forceful action sometimes leads to grave violence.

“As such, the President instructed the Acting IGP Chandana Wickremaratne not to entertain complaints received from the leasing companies after seizing.”

Sri Lanka’s Finance Houses Associationits 41 licensed finance companies who were its members had “already offered debt moratorium as stipulated by the Government of Sri Lanka which was in line with Circular No. 04 and 05 of 2020 issued by the Central Bank of Sri Lanka,

In Sri Lanka deposit taking and lending is a regulated business and unauthorized lenders cannot legally enforce contracts, leading to strong arm tactics to recover money by unauthorized lenders. (Colombo/June14/2020)

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Sri Lanka eyes SOE law by May 2024 for better governance

ECONOMYNEXT – Sri Lanka is planning to pass a Public Commercial Business (PCB) Act improve governance of state-owned enterprise by May 2024 as part of an anti-corruption efforts following an International Monetary Fund assessment.

Sri Lanka’s state enterprises have been used by politicians to give ‘jobs of the boys’, appropriate vehicles for personal use, fill board of directors and key positions with henchmen and relatives, according to critics.

Meanwhile macro-economists working for the state also used them to give off-budget subsides or made energy utilities in particular borrow through supplier’s credits and state banks after forex shortages are triggered through inflationary rate cuts.

The government has taken billons of dollars of loans given to Ceylon Petroleum Corporation from state banks.

There have also been high profile procurement scandals connected to SOEs.

An SOE Reform Policy was approved by Sri Lanka’s cabinet of ministers in May 2023.

The Public Commercial Business (PCB) Act has now been drafted.

A holding company to own the SOEs will be incorporated and an Advisory Committee and Board of Directors will be appointed after the PCB law is approved, the statement said. (Colombo/Mar01/2024)

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Sri Lanka rupee closes at 308.80/90 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 308.80/90 to the US dollar Friday, from 309.50/70 on Thursday, dealers said.

Bond yields were broadly steady.

A bond maturing on 01.02.2026 closed at 10.65/75 percent up from 10.50/70 percent.

A bond maturing on 15.09.2027 closed at 11.90/12.05 percent from 11.90/12.10 percent.

A bond maturing on 01.07.2028 closed at 12.15/35 percent down from 12.20/25 percent.

A bond maturing on 15.07.2029 closed at 12.25/40 percent up from 12.30/45 percent.

A bond maturing on 15.05.2030 closed at 12.30/45 percent down from 12.35/50 percent.

A bond maturing on 01.07.2032 closed at 12.50/13.00 percent from 12.55/13.00 percent. (Colombo/Mar1/2024)

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Sri Lanka stocks close up 0.37-pct, Expo to de-list

ECONOMYNEXT – The Colombo Stock Exchange closed up 0.37 percent on Friday, and SG Holdings, the parent company of Expolanka Holdings Plc, said it was taking the company private.

Expolanka is the largest listed company on the Colombo Stock Exchange.

“Expolanka Holdings PLC has, at the Board Meeting held on 1st March 2024, considered a request from its principal shareholder and resolved to initiate the de-listing of the Company’s shares from the Official List of the Colombo Stock Exchange subject to obtaining necessary shareholder approval and regulatory approvals,” the company said in a stock exchange filing.

As per arrangements with SG Holdings Global Pte Ltd, the Company’s majority shareholder, it will purchase its shares from shareholders who may wish to divest their shareholding in the Company at a purchase price of Rs 185.00 per share. The share closed up at 150.50.

The broader All Share Index closed up 0.37 percent, or 39.47 points, at 10,691; while the S&P SL20 Index closed down 0.64 percent, or 19.59 points, at 3,037.

Turnover stayed above the 1 billion mark for the sixth consecutive day, registering 1.4 billion.

Crossings in Melstarcorp Plc (135mn) up at 89.50, Hatton National Bank Plc (64mn) up at 158.00, Hemas Holdings Plc (53mn) up at 75.00 and Central Finance Company Plc (26mn) up at 103.50, added significantly to the day’s turnover.

“The upward trend is continuing, with more retail buying also coming in, the number of trades was more than 10,000 today,” a market participant said. “Investors are looking for undervalued stocks and buying in quantities.” (Colombo/Mar1/2024).

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