Asian Financial Services Association

Sri Lanka

1

Bus.Permit Issued By

:

- Central Bank (Registration Under Finance Leasing ACT. No. 56 of 2000), Others (Registrar of Companies)

2

Business Requirement

*

Bus.Requirement Percentage (%) of Foreign Ownership Allowed

:

-

*

Bus. Requirement Minimum Capital Requirements

:

SLR.75 Million

*

Bus. Requirement Number Of Active Companies in Operation

:

68

*

Bus. Requirement New Business Permit

:

Allowed

3

Bus. Activities Include

:

Leasing, Others (Hire purchase and term loans)

4

Products Financed

:

Automotives (4 wheelers, 2 wheelers, Trucks, Transportation Vehicle (buses), Heavy Equipment, Machineries, Electronic Devices (computer, air conditioning), Others (Tractors or Any Other Movable Asset)

5

Source Of Funds

:

Banks (on-shore), Others capital products (Lease backed trust certificates), Privates placement by pension funds, Private placement by insurance companies

6

Loans

:

Source of loans
- Domestic : - Provided by the government (Central Bank)
- Provided by private sector
- Off shore

Regulation in relation to Gearing Ratio Direction No. 04 of 2005 issued by Central Bank of Sri Lanka:
- 10 : 1 During The First 3 Years
- 7 : 1 From The Fourth Year

7

Accounting Treatment

*

Allowance for Bad-Debt & Write-Offs(%)

:

Actual

*

Tax Deductible

:

Nil

8

Taxes

*

Corporate Tax rate Regulation (%)

:

32.5%

*

Withholding Tax Regulation (%)

:

10.0%

*

VAT Regulation (%)

:

15%

*

Sales & Leaseback Regulation / Vat Implemented or not

:

VAT is being implemented

9

Legal Aspects

:

Securitisation law is at Draft Stage Finance Leasing Act No. 56 of 2000 needs Amendments

10

Reporting Mechanism-Supervision

:

Central Bank

11

Constraints In Operation

:

- Leasing companies are prohibited from accepting public deposits and finance companies commercial banks are permitted to accept public deposits.
- Restrictions in capitals allowances depreciation rates have been changed for machinary and motor vehicles

12

Opportunites in Business

:

Diversification into new ventures
Islamic Financial Service Unit (FSU) was established in October 2005
Utilizing credit lines offered by Central Bank as an approved Participating Financial Institution (PFI)

13

Miscellaneous

:

Regulatory Directions Issued by Central Bank Of Sri Lanka
1. Reporting Requirements - 2003
2. Minimum Capital of SLR.75 Million - 2005
3. Provision For Bad and Doubtful Debt - 2005
4. Single Borrower Limit - 2005
5. Gearing Ratio - 2005
6. Accrued Interest - 2005
7. Maintenance of a Reserve Fund - 2005