The UAE’s Federal National Council (FNC) has approved a draft bill to regulate finance leasing through the Central Bank, in a bid to improve the credibility of contracts offering terms that allow access to funds for large capital expenditure without having to lean on large bank loans.
The draft law calls for all entities offering finance leases to gain a license to operate from the UAE Central Bank. Unlicensed individuals and businesses will not be permitted to use finance leasing, “or any synonym of it” in their trade name, according to a release on Emirates News Agency, WAM.
Those in violation of the terms set out will be subject to imprisonment or a fine of up to AED 10 million.
Finance leases are a vital part of the economy, according to the statement by the FNC, and allow industrial and commercial projects to receive equipment and production tools on rent, with the right to ownership at the end of the leasing period without having to resort to bank financing in order to buy the equipment directly.
The bill, currently in the form of a draft and pending further scrutiny, “strengthens the ability of economic institutions and establishments to compete and keep up with international development, contributes to attracting industrial investments and financial flows and develops financing mechanisms in a way that helps achieve the country’s developmental goals,” according to the statement.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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