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Operational Leasing Gains Traction

Operational Leasing Gains Traction  Operational Leasing Gains Traction

The Union of Iranian Leasing Companies has formed a committee to develop new leasing methods to enhance efficiency with a focus on operational leasing.

At the inauguration on Thursday, Hadi Isfahani, the committee head, said operational leasing is the basis of the industry and lack of such services has indeed contributed to the failure of leasers, the union’s official website quoted him as saying.

Leasing agreements usually contain strict protection measures against delays in repayment, but operational leasing, being more flexible in lease terms, aims to better serve both parties where vehicles’ maintenance, insurance, registration and other services are covered by the leasing company. Isfahani said the new measure is awaiting approval by the Central Bank of Iran.

Referring to operational leasing as an example of profitable leasing now in vogue in many countries, he said, “Unfortunately, the CBI has restricted leasing activities merely to ‘rent-to-buy’ and ‘selling in installment’ which could be performed by banks too.”

“This is not leasing business and can undermine the performance of leasing companies,” he warned.

The union is also planning to prepare the grounds for Iran’s leasing industry to use new methods in line with international trends.

Elaborating on the committee’s plans, Isfahani said eight sub-committees would work to develop a roadmap in different phases including comparative studies, creating substructures, fundraising and trail implementation.

The National Iranian Oil Company has been providing operational leasing services since the 1990s by offering long term loans for buying tanker trucks. The tankers work only for NIOC until the full loan is repaid.

CBI cooperation, transparency and a change in public perception about the leasing industry are the prerequisites for a successful implementation of new leasing methods, the union official said.  Public trust in leasing firms has waned in recent years due to different high-profile fraud cases, not to mention that they normally charge exorbitant interest rates not many can afford.

However, the number of leasing firms has been on the increase in recent years as the business is seen as lucrative.

Financialtribune.com