People Leasing Co to get finance company licence
People Leasing Company PLC (PLC) is hopeful of getting a finance company licence within the next few months, after which it would transform to a finance company from a leasing outfit, officials said. “We have applied for a finance company licence and optimistic of a favourable response within the next few months,” D.P. Kumarage, CEO PLC told the Business Times.
Already PLC has an over 80% owned finance company – People’s Finance PLC – and when asked as to why they need another finance company licence, Mr. Kumarage explained that this is done in a bid to diversify and expand PLC’s reach. “Once PLC gets the finance company licence, the company may have to amalgamate with People’s Finance as there are regulatory restrictions on operating more than one finance company within a group. Since the existing finance company, People’s Finance is restricted from financing its parent PLC, it’s difficult for PLC to explore its full potential in its growth. This is why we decided that a separate finance company license for PLC is a must. When we get the licence, we’ll be known as a finance company (and not a leasing firm),” he said. He said that People’s Finance is restricted from financing its parent PLC as PLC is a larger firm and People’s Finance doesn’t have the acumen to fund PLC’s projects.
When asked on the mode of amalgamation (merger), Mr. Kumarage said that it was too premature for the company to decide on this as PLC also needs to study the same and take into account any concerns that the regulators will have which will be communicated later.
PLC is now positioned as a provider of a broad range of financial services with subsidiaries carrying out micro finance, Islamic finance, property and casualty insurance and fleet management operations under its wing.
Mr. Kumarage added that the industry is down 30%-40% this year, but there’re gradual signs of its growth accelerating. He added that as many state funded as well as private projects are in the pipeline, PLC is bullish about the leasing as well as financing industry.
Recently Fitch Ratings upgraded PLC’s National Long-Term rating to ‘AA-(lka)’ from ‘A+(lka)’; and People’s Finance was also upgraded to ‘A(lka)’ from ‘A-(lka)’. At end-March 2012, PLC’s and People’s Finance’s aggregate retail funding amounted to over Rs 23 billion and funded 24 per cent of the PLC group assets. As at end-March 2012 PLC’s consolidated assets stood at Rs 69 billion.
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