Financial Sector Assessment

Selected Issues on the Regulation and Supervision of Leasing Companies [7] [8]

companies over banks is that they own the leased asset. However, physical repossession can still prove difficult. For instance, the mobility of the leased asset has made reposses­sion even more difficult. In its lessons of experience, International Finance Corporation (1996) has identified a set of measures to develop a favorable regulatory environment for leasing (box 6.2).

In many countries, leasing companies are not regulated and supervised because they do not take deposits. However, many leasing companies are bank subsidiaries, and regu­lators should be interested in such companies for the purpose of consolidated supervi­sion. Moreover, as previously stated, even for NBFIs where retail deposits and systemic issues are not involved and where corporate laws are still evolving, additional condi­tions—including licensing requirements, minimum capital requirements, accountability requirements, and risk conditions consistent with the risk involved in the industry—can support market conduct.