Financial Leasing

Financial leasing is one of the most important medium-term financing methods, and it is defined as asset-based financing, i.e. used to finance movable and immovable assets, through the financial leasing companies purchasing the assets chosen by the lessee from suppliers, and then granting the authority to use, possess and benefit from these assets. Purchased for the use of the lessee for a specified period of time in exchange for lease payments, which is called the economic ownership of the lessee, with the legal ownership remaining for the lessor, and the financial lease contract ends either with ownership or with the option to purchase.

Financial leasing is one of the financing methods that complement the available means available in the Palestinian market, whether from banks or micro-credit institutions.

It is important to emphasize that the development of new financing tools enables countries to deepen the activities of their financial sector, expand the base of beneficiaries, and introduce new parties that provide new financial products. Which contributes to the speed of economic development by increasing cash flows directed to various groups and sectors, especially to the productive sectors, which supports local production, improves the profitability of institutions, creates more job opportunities, and contributes to alleviating unemployment and increasing economic growth rates.

What distinguishes financial leasing is that it provides a greater opportunity to obtain financing through a mechanism related to the use of the produced asset as a guarantee, especially in light of the inability of the financing market to absorb all the financing needs of capital assets for several reasons, the most important of which may be the inability of the beneficiary to provide the tangible guarantees that the financier usually requires as a guarantee.

The PCMA has developed the legal and regulatory environment for the sector, as the resolution of a law on financial leasing issued in 2014 is the first in the Middle East and North Africa region in terms of its proximity and observance of the standard financial leasing law issued by the International Institute for the Unification of Private Laws UNIDROIT.

The PCMA also issued instructions for supervision and licensing of financial leasing companies and specialized instructions to enhance anti-money laundering and terrorist financing operations. The PCMA cooperated with the relevant authorities to issue its specialized instructions that help in developing and regulating the work of the financial leasing sector and the companies operating in it.