Financial leasing ready to take off in Seychelles

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Financial leasing ready to take off in Seychelles

Post  Sirop14 on Fri May 09, 2014 9:08 am

Comment - This morning there have been a great deal of manure churned about our/my person, beside the many others who will be affected and abused by the system and officials think fit - when they wish. Then what they write and say in the Commons. The money and tax payers money they squander - wast and throw away.

Government bad practice and corruption is everywhere - the manner we get treated in Britain daily - if we/I was not in this country say Russia or France - the garbage/daily con and media crap of their Bank performing, their economy would be very different. As in the media this morning example.

Worse still Sechelles Seychelles - I/we have known and worked in Leasing way back in 1978 form some 3/4 years - later in London some of the companies I/we had been in touch.

It is the manner and approach of the government - among one of the product of that financial company I had registered was to provide Leasing service and the Central Bank is making/passing this as if suddenly they have invented such workings/system - this is the stink and as such their attitude when anybody will deal with them.

Then our countryman is force/compel to write the Russians and the Arabs are buying all the lands and building all the big buildings.



Financial leasing ready to take off in Seychelles
It will henceforth be easier for small-scale entrepreneurs in Seychelles to strengthen and expand their businesses now that the foundation for leasing facilities has been laid.
This follows the signing by the Central Bank of Seychelles (CBS) of the Africa Leasing Facility (ALF) Cooperation Agreement with the International Finance Corporation (IFC), a member of the World Bank Group.

The agreement was signed on behalf of the CBS by its governor Caroline Abel and on behalf of the IFC by its country manager for Madagascar, Mauritius and Seychelles, Satyam Ramnauth.
Leasing is an innovative financing solution for small enterprises that often lack the credit history or sufficient collateral required by most banks to finance the necessary equipment to heighten productivity.

It will provide the Seychellois entrepreneurs with an alternative means of financing their businesses.
In a statement, Ms Abel noted that “leasing will be particularly useful as a financial instrument for small businesses in Seychelles because these businesses often lack the credit history or sufficient collateral to access traditional forms of financing”.

CBS along with other relevant authorities will be working closely with the IFC, under the umbrella of this cooperation agreement, to further develop the local environment to ensure
that financial leasing thrives in Seychelles and achieves its full potential.

IFC will thus be providing CBS with some guidance during the drafting of the regulations to be issued, and the Bank thus expects to start accepting financial leasing licence applications during the second half of the year.

This cooperation agreement will also assist with the awareness campaign and training for stakeholders and this will be particularly beneficial for the local market.

For his part, Mr Ramnauth, said: “Countries looking to strengthen their economies, such as Seychelles, stand to benefit greatly when equipment for efficiency and capacity expansion is more accessible to its small business owners, especially in the agribusiness, fishing, light manufacturing, tourism, transport sector and business in general. With the necessary financial tools available to them, Seychelles’ entrepreneurs have the capacity to play an important role in the country’s future development.”

IFC’s Africa Leasing Facility assists in creating a legislative and regulatory environment favorable for leasing, build capacity of leasing stakeholders, and mobilise investment in the
continent’s leasing industry. It allows the benefiting party to leverage on IFC’s international network and to gain a global reach.

http://www.nation.sc/article.html?id=241617

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Financial leasing in Seychelles

Post  Sirop14 on Mon Apr 18, 2016 8:56 pm

Financial leasing in Seychelles

18-April-2016
The Central Bank of Seychelles has been working on providing for the enabling environment to allow for the evolution of our financial sector. The introduction of the legislative framework for the licensing and regulation of financial leasing institutions in Seychelles forms a key part of the aim to increase the available financing options.

Accordingly, the Central Bank of Seychelles (CBS) will be issuing a set of three articles aimed at creating awareness on this alternative financing solution which will shortly be available. The first part will aim to introduce the core concept behind financial leasing and contrast it to the more common financing option, which is via loans. The second part, will touch briefly upon the typical process which one would have to go through in applying for a finance lease. The third and final part of this series of articles will in essence outline the benefits of a finance lease for Small and Medium-Sized Entrepreneurs (a segment which stands to benefit immensely from finance leases) and in doing so highlight some of the beneficial elements for the financial leasing institution, which will serve to encourage these to take venture into this segment of the market.

Part 1: Introduction to Financial Leasing (FL) concept

Financial Leasing (FL) is used all over the world and is an alternative means for financing moveable assets. An FL agreement is of a tri-partite nature, meaning that this is an agreement entered into by three parties. More details are provided in respect of these three parties in Table 1.

Table 1: Three parties to an FL agreement

Party Legal definition Explanation

Lessor

A person licensed or approved, to conduct financial leasing business and who transfers the right to possession and use of an asset under lease to a lessee.

This will be the company licensed by the Central Bank in order to offer such a financing option. This could include banks which are granted approval in this regard, as well as other non-banks. Accordingly, businesses will have to apply to these companies in order to request funding for equipment via an FL agreement. One would be able to go to the banks, but also to other companies which are licensed specifically for the purpose of engaging in FL business in Seychelles.

Lessee

A person who acquires a right to possession and use of an asset under the lease for an agreed period of time in exchange for agreed lease payments.

This will be the person applying for financing for the purchase of the asset. These assets will generally be used by the business in order to generate a revenue for the business and to allow for the scheduled repayments to be effected.

Supplier

A person who supplies an asset for the purpose of a financial lease, and transfers title to the asset to the lessor for delivery to the lessee.

This will be the supplier of the asset. The supplier will be paid directly by the lessor and typically will transfer the title of ownership to the asset over to the lessor, but can deliver the asset over to the lessee if so agreed.

An FL agreement can be defined as an agreement between three parties –namely the lessor, lessee and the supplier – whereby the lessor provides an asset for use by the lessee, for a period of time (known as the tenor) in return for specified payments by the lessee.

In Seychelles, the Central Bank of Seychelles expects to commence accepting licence applications from prospective financial leasing institutions (FLI) within the second quarter of 2016. In anticipation of this, the first part of this article is intended to create awareness of the upcoming development and to provide a general insight of FL and to highlight some of the most prominent potential benefits which this new financing option can bring. It will be followed by two more parts, the second of which will touch upon the benefits which FL can bring for SMEs, and the final part providing an illustrative view of the process for applying for an FL.

Currently, when a business wishes to fund a piece of equipment to be used as part of its business operations, one would generally go to a bank to acquire a loan in the absence of available unallocated funds to purchase the asset outright (i.e. payment in cash). With the development of the FL sector, businesses will have a greater choice. Rather than only having the banks to go to, one will be able to shop around and compare the offerings from both banks and FLIs.

It is worth noting that while banks will, subject to the Central Bank of Seychelles approval, also be able to commence offering FLs, it is expected that there will also be other companies which are not banks that may wish to apply for an FL licence. We typically refer to these as non-bank FLIs. Central Bank of Seychelles’ requirements for these will be less demanding in the case of non-deposit-taking FLIs, (as compared with deposit-taking FLIs which will generally be regulated more like banks).

Accordingly, there will be more choice and this choice element will allow the customers to better negotiate and find the best deal for their purpose.

With this point in mind, let us now consider some of the typical aspects of an FL and contrast these to the more common financing options which are used locally, for instance loans.

When one applies for a loan, the banks mostly require the applicant to provide a collateral as security for the loan or to provide guarantors, unless it is an unsecured loan, in which case the applicant is typically subjected to higher interest rates to account for the increased risk of such exposures. The collateral or guarantor requirement typically serves as a form of security and provides the bank with a sense of guarantee that the person will repay the borrowed amount and interest, as agreed. Once the loan request is approved, the funds are disbursed to the applicant, who then directly effects payment for the purchase of such asset from the supplier. This asset is owned by the borrower, with the bank having a lien on the asset. Accordingly, the borrower cannot sell the asset without the bank’s approval. Therein lies one of the key distinguishing element between a loan and a FL and this is illustrated diagrammatically in figures 2 and 3.

http://www.nation.sc/article.html?id=249118

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Financial leasing in Seychelles – Part 2

Post  Sirop14 on Tue May 03, 2016 8:09 pm

Financial leasing in Seychelles – Part 2

03-May-2016
Typical process in applying for a finance lease
In the first part of this series of articles, the subject matter was briefly introduced and some examples of certain benefits were given. In today’s article, we will go briefly over the typical process for applying for a finance lease.
Typically, the lessee will choose the asset and negotiate the price and purchase modalities with the supplier as well as the required guarantees. This information along with any other additional materials required are submitted to the lessor for processing. If the request is approved, the lessor will communicate such with the lessee and advise of its required terms and conditions. Subject to the lessee’s acceptance of said terms and conditions, the lessor and the lessee may enter into an agreement for the supply of the asset. The lessor will then liaise directly with the supplier to obtain a supply agreement, arrange for delivery and effect payment.
Upon delivery and acceptance of the asset by the lessee, the terms and conditions of the financial lease agreement become irrevocable; and the lessee is then required to effect the agreed payments during the tenor period. During this tenor, the lessee is granted the right to possess and use the asset subject to the terms and conditions of the financial lease agreement.
It is crucial to note that under a financial lease agreement, the lessor retains legal ownership of the leased asset, while the lessee attains economic ownership and assumes the risks and rewards from use of this asset. In this regard, the Act also makes provision for the protection of the lessor’s ownership of the asset in the event that the lessee goes bankrupt.
As such, other creditors of the lessee cannot make a claim on the leased asset, as this asset is effectively owned by the lessor. This serves to further reinforce the lessor’s confidence in offering a financial lease.
Upon expiration of the tenor, and subject to agreement by both parties, the lessee has the option to:
a) return the asset to the lessor;
b) renew the financial lease agreement; or
c) purchase the asset for a residual value.
Only in the case of option (c) above is there a transfer of legal ownership of the asset.
Typically, a financial lease will cover a substantial part of the economically useful life of the asset, during which the lessee pays the principal plus an interest component, and the general assumption is that the lessee will execute the purchase option. In the third and final part of this series of articles, we will look at the segment for which finance leases can greatly serve, while addressing some of the elements that will serve to create enhanced confidence amongst financial leasing institutions.
Contributed by Central Bank of Seychelles

http://www.nation.sc/article.html?id=249283

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Financial leasing in Seychelles –Part 3

Post  Sirop14 on Mon May 09, 2016 11:18 am

Financial leasing in Seychelles –Part 3

09-May-2016
Benefits of the introduction of financial leasing
This third and final part of the series of articles aims to provide an overview of the segment of the market that stands to benefit from the introduction of financial leasing and to also highlight some of the enabling elements.
The promotion and formal introduction of this alternative means of finance is particularly aimed at small and medium-sized enterprises (SMEs), which generally find it harder to acquire loans from banks, as these are usually constrained by a lack of collateral to use as security for a loan. SMEs are typically perceived as inherently riskier investments than large corporates and this also adversely affects the terms and conditions which a bank would accord them for a loan. The added benefit of the asset under a financial lease itself serving as the collateral is therefore extremely useful for SMEs as additional collateral (other than the asset under lease itself) is only seldom required. This is abetted by the fact that the lessor retains legal ownership of the asset during the tenor (as previously noted above) and this is clearly provided for in the Financial Leasing Act. The latter in fact makes provision for the assignment of a registry for the registration of assets under a financial lease, which will serve as a notice to third party purchasers of leased assets of existing interest (lien) in the leased asset and further serves to protect the lessor.
Moreover, the guarantee in protection of the legal ownership of the asset enhances the lessor’s confidence in dealing with this sector. This concept provides the lessor with an additional assurance which they would not have with a loan by making it relatively easier for the lessor to repossess the asset in case of a breach of the terms and conditions of the financial lease.
This is in view that the lessor retains legal ownership of the leased asset during the tenor and the lessee has merely been accorded the right to possess and use the asset subject to the terms and conditions of such financial lease. Nonetheless, the due legal process still has to be followed, thereby also protecting the lessee from abuse. Should a lessee be experiencing any difficulties, his/her best course of action would be to approach the lessor in an attempt to come to a solution at an early stage. However, as long as both parties abide to these, the quiet possession, use and enjoyment of the asset by the lessee should not be infringed.
Financial leasing is considered as a credit facility and as such information on financial leases will also feature on the Credit Information System (CIS) which is administered by the Central Bank. This will contribute to lessees generating a credit history over time, such that lessors may make fast and informed decisions in terms of credit allocation and credit pricing, consequently promoting greater efficiency in the financial system.
The Central Bank will also be the licensing and regulatory authority for Financial Leasing in Seychelles. The Act also makes provisions for the Central Bank to prescribe prudential requirements which Financial Leasing Institutions will have to abide to, as well as enforce penalties against offenders. In general, regulation by the Central Bank is intended to ensure that the soundness of our financial system is not undermined.
To conclude, the introduction of financial leasing is expected to provide the public with an alternative means of finance. This will be particularly beneficial to SMEs, many of which may not necessarily have the collateral requirements to acquire a loan from a bank. Given that the lessor retains legal ownership of the leased asset during the tenor, additional collateral is seldom required, as in most cases the asset will itself effectively serve as the collateral. This is expected to therefore increase domestic productivity, thereby leading to increased domestic employment, labour specialisation, and greater export potential, to name a few.

Source Seychelles Nation

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