Financial leasing market to be supervised by self-regulatory organisations
The Bank of Russia considered the proposals that leasing companies put forward during the development of draft amendments and novations to the federal legislation, aimed at modernisation of the leasing market. Self-regulation for leasing companies and other novations were discussed at the special meeting between the regulator and market participants.
Soon the leasing market will be subject to a reform that will change its structure and regulation. The ultimate objective is to create a favourable business environment, beneficial for the investment and economic growth. The reform includes establishing a comprehensive regulatory framework for leasing companies, ensuring the protection of their property interests, increasing transparency of leasing through application of international accounting and reporting standards and implementing general standards, which will partially unify leasing activities and help to minimise the risks.
It is expected that from next year leasing companies will be considered non-bank financial institutions. As with other financial market participants, the regulator intends to develop a legally binding list of distinctive features, compliance with which grants a company status of a leasing company and allows it to offer its customers leasing products. These features include: being a resident legal entity, inclusion in the register of leasing companies, participation in a self-regulatory organisation (SRO), a word ‘leasing’ or its derivatives in the name of the company and having minimum equity capital. Leasing should be the main activity of the company and other types of activities in the financial market are not allowed. Apart from leasing and financial leasing, activities might include recovery and reselling of leased property, short-term financing of the customers, placing of assets in financial instruments and some other types of activities. ‘Financial difficulties of some major players in the leasing market and emerging ‘bubbles’, influenced by excess leasing supply that recently took place in the markets, have highlighted the questions we need to address,’ says Adviser of the First Deputy Governor of the Bank of Russia Sergey Moiseev.
The Bank of Russia plans to provide methodological and consultative assistance to market participants regarding establishment of an SRO. It will be in charge of maintenance of the companies register, development of industry-specific standards and control over compliance with these standards.
The reform should enhance the role of leasing in the modernisation of Russian economy, cut the costs of leasing companies’ financing and costs of leasing to the non-financial sector.