Business
Statutes and regulations associated with Regulated Finance Companies
By Shiranthi Gunawardana –
Attorney at Law and Legal Consultant to the Finance
Houses Association
Regulated Finance Companies (RFCs) are major financial intermediaries which are duly regulated and governed by the laws of Sri Lanka. RFCs are strictly governed by virtue of statutes and Acts such as Finance Business Act No. 42 of 2011. The other statutes which are applicable are Finance Leasing Act No. 56 of 2000 as amended, Consumer Credit Act, Mortgage Act, Motor Traffic Act, Inland Trust Receipts Act, Debt Recovery Special Provisions Act, Criminal Procedure Amendment Act, Companies Act and so on.
The Finance Business Act No. 42 of 2011 is an Act to provide control and supervision of finance companies registered in the Central Bank and the act has repealed the Finance Companies Act No. 78 of 1998. The Act outlines the licensing procedures, directions, rules and requirements of finance companies, including core capital reserve funds, admissible business activities by finance companies. Under this act, it is mandatory that a company cannot accept public deposits unless it is registered and licensed as a finance company under the Act and to be registered as a Licensed Finance Company, that company needs to have registered under the Companies Act, No. 7 of 2007. The Act also provides for a separate director in the CBSL to monitor and control NBFIs. According to the sections 13 and 14 of the Act, the director is vested with power to act upon NBFIs if they fail to comply with the directions which are listed in sections 13 and 14 suggested under the Finance Business Act.
All RFCs are legally bound and obliged to comply with all the directions and circulars issued under the Finance Businesses Act No. 42 of 2011.
Importance of the Finance Leasing Act
The Finance Leasing Act No. 56 of 2000 as amended by Act No. 24 of 2005 and Act No. 33 of 2007 makes it that it is mandatory to have a license under the Finance Leasing Act to carry on finance leasing businesses. Section 32 of the Finance Leasing Act clearly sets out the repercussions of carrying on Finance Leasing Businesses without registration. Under this section, the director of the Central Bank has the right under Section 32(2) and Section 32(3) (a) (b) to apply to the High Court and obtain an injunction.
Under the Finance Leasing Act, there are 4 mandatory provisions which have to be strictly followed as provided by Section 31 of the Finance leasing Act No. 56 of 2000.
The mandatory provisions are
• Section 11 – Right to undisturbed possession
• Section 16 – Termination on variations of a supply agreement.
• Section 22 – Computation of damages recoverable from the Lessee.
• Section 24 – Which has been amended by Act No 24 of 2005 – Which provides for transfer or assignment of Lessor’s rights.
For RFCs – To carry out finance business and to accept public deposits, a license has to be obtained from the monetary board which has to be annually renewed and for finance leasing businesses a separate license which is again renewable annually has to be obtained.
Approved credit agency status is granted under the Mortgage Act No. 06 of 1949 as amended. The Trust receipt ordinance No. 12 of 1947 and the Inland trust receipt Act of No. 14 of 1990 also are Acts under which businesses can be carried on.
Under these Acts, with the relevant authority given, a finance company can engage in mortgage of movables and mortgage of shares and allied businesses.
The mortgage of corporeal movables such as gold articles, motor vehicles can be carried on by finance companies who are also approved credit agencies and can enjoy the special benefits granted under these Acts in their recovery process.
It is evident from the above statues and regulations that RFCs are well regulated and governed and are legally bound to abide by the said regulations and directions. RFCs are aware of the consequences of failing to abide by these regulations, accordingly 99% of RFCs do comply with these regulations which is an encouraging sign for customers to embrace the services of RFCs.
The writer is the Legal Consultant of the FHA with 45 years of experience in the finance industry.
The Delegation of German Industry and Commerce in Sri Lanka (AHK Sri Lanka) proudly facilitated the first-ever Sri Lankan delegation’s participation at Drupa 2024, the world’s largest trade fair for the printing industry and technology. Held after an eight-year hiatus, Drupa 2024 was a landmark event, marking significant advancements and opportunities in the global printing industry.
AHK Sri Lanka played a pivotal role in organising and supporting the delegation, which comprised 17 members from the Sri Lanka Association for Printers (SLAP), representing eight companies from the commercial, newspaper, stationery printing, and packaging industries. This pioneering effort by AHK Sri Lanka not only showcased the diverse capabilities of Sri Lanka’s printing sector but also facilitated vital bilateral discussions with key stakeholders from the German printing industry.
Business
Unveiling Ayugiri: Browns Hotels & Resorts sets the stage for a new era in luxury Ayurveda Wellness
In a captivating reimagining of luxury wellness tourism, Browns Hotels & Resorts proudly unveiled the exquisite Ayugiri Ayurveda Wellness Resort Sigiriya. This momentous occasion, celebrated amidst a vibrant and serene grand opening on the 6th of June, heralds a new chapter in the Ayurveda wellness tourism landscape in Sri Lanka. Nestled amidst 54 acres of unspoiled natural splendour, Ayugiri features 22 exclusive suites and stands out as the only luxury Ayurveda wellness resort in the country offering plunge pools in every room, rendering it truly one-of-a-kind.
The grand opening of Ayugiri Ayurveda Wellness Resort was an enchanting event, where guests were captivated by the melodies of flutists and violinists resonating through Sigiriya’s lush landscapes. As traditional drummers and dancers infused the air with vibrant energy, Browns Hotels & Resorts’ CEO, Eksath Wijeratne, Kotaro Katsuki, Acting Ambassador for the Embassy of Japan and General Manager, Buwaneka Bandara, unveiled the resort’s new logo, marking a significant moment witnessed by distinguished guests from the French Embassy, Ayurveda and wellness enthusiasts along with officials from the Sigiriya area, LOLC Holdings and Browns Group.
“Our strategic expansion into wellness tourism with Ayugiri Ayurveda Wellness Resort Sigiriya symbolises a significant milestone for Browns Hotels & Resorts. Wellness tourism has consistently outperformed the overall tourism industry for over a decade, reflecting a growing global interest in travel that goes beyond leisure to offer rejuvenation and holistic well-being. By integrating the timeless wisdom of Ayurveda with modern luxury, we aim to set a new standard in luxury wellness tourism in Sri Lanka. Whether your goal is prevention, healing, or a deeper connection to inner harmony, Ayugiri offers a sanctuary for holistic well-being” stated Eksath Wijeratne.
Ayugiri encapsulates the essence of life, inspired by the lotus flower held by the graceful queens of the infamous Sigiriya frescoes. Just as the lotus emerges from the murky depths, untainted and serene,
Ayugiri invites guests on a journey of purity and rejuvenation, harmonised with a balance of mind, body and spirit, the essence of nature, echoes of culture and the wisdom of ancient Ayurvedic healing.
HNB General Insurance, one of Sri Lanka’s leading general insurance providers, has been honored as the Best General Bancassurance Provider in Sri Lanka 2024 by the prestigious Global Banking and Finance Review – UK.
The esteemed accolade underscores HNB General Insurance’s unwavering commitment to excellence and its outstanding performance in the field of bancassurance. Through dedication and hard work, the HNB General Insurance team has continuously endeavored to deliver innovative insurance solutions, cultivate strong relationships with banking partners, and provide unparalleled service to customers nationwide. This recognition is a testament to the team’s dedication and relentless pursuit of excellence in the bancassurance business.
“We are honored to receive this prestigious award, which reflects our team’s tireless efforts and dedication to delivering value-added insurance solutions and exceptional service through our bancassurance partnerships,” said Sithumina Jayasundara, CEO of HNB General Insurance. “This recognition reaffirms our position as a trusted insurance provider in Sri Lanka and motivates us to continue striving for excellence in serving our customers and communities.”
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