19 March 2016
Muscat: A majority of leasing and hire purchase companies in the country have reached the minimum capital requirement stipulated by the Central Bank of Oman (CBO) at OMR25 million, well ahead of its deadline by the year-end.
A few other companies have structured their bond conversion plans in such a way so as to touch the paid-up capital at OMR25 million before the end of this year.
The CBO, a few years ago, had asked leasing and hire purchase companies to raise minimum capital to OMR25 million by the end of 2016 from OMR20 million in 2012 in a phased manner -- OMR1 million each year starting from 2012.
"Our present paid-up capital is OMR26.32 million. It was raised by way of issuing bonus shares from retained earnings and rights issue. We had a OMR7.5 million rights issue in 2012," Robert Pancras, chief executive officer (CEO) of the National Finance Company, told 'Times of Oman'.
Aftab Patel, chief executive officer of Al Omaniya Financial Services, said his company's capital base would cross the stipulated figure of OMR25 million by the end of 2016. Al Omaniya's two compulsory convertible bond issues, which were issued earlier, are due for conversion into equity in March and April, respectively.
Al Omaniya has issued compulsory convertible bonds in such a way that OMR2 million was converted into equity during the last few years. The company also issued rights shares. Most of the finance companies have enhanced their capital base by way of convertible bond issue, bonus shares or rights issue.
The reason for raising the minimum capital was to make leasing firms strong and stable, which will ensure confidence in these companies. Companies with large capital can withstand any market volatility and achieve better growth.
"With a large capital base, the ability to lend money to a single client goes up. If you have a large capital, your capital adequacy ratio goes up," noted Patel. However, leasing companies need to get a greater volume of business to service a higher capital.
Muscat Finance has a paid up capital of OMR25.16 million, according to the MSM website. Also, United Finance and Taageer Finance have also crossed the minimum stipulated capital of OMR25 million, the MSM website pointed out.
Muscat: A majority of leasing and hire purchase companies in the country have reached the minimum capital requirement stipulated by the Central Bank of Oman (CBO) at OMR25 million, well ahead of its deadline by the year-end.
A few other companies have structured their bond conversion plans in such a way so as to touch the paid-up capital at OMR25 million before the end of this year.
The CBO, a few years ago, had asked leasing and hire purchase companies to raise minimum capital to OMR25 million by the end of 2016 from OMR20 million in 2012 in a phased manner -- OMR1 million each year starting from 2012.
"Our present paid-up capital is OMR26.32 million. It was raised by way of issuing bonus shares from retained earnings and rights issue. We had a OMR7.5 million rights issue in 2012," Robert Pancras, chief executive officer (CEO) of the National Finance Company, told 'Times of Oman'.
Aftab Patel, chief executive officer of Al Omaniya Financial Services, said his company's capital base would cross the stipulated figure of OMR25 million by the end of 2016. Al Omaniya's two compulsory convertible bond issues, which were issued earlier, are due for conversion into equity in March and April, respectively.
Al Omaniya has issued compulsory convertible bonds in such a way that OMR2 million was converted into equity during the last few years. The company also issued rights shares. Most of the finance companies have enhanced their capital base by way of convertible bond issue, bonus shares or rights issue.
The reason for raising the minimum capital was to make leasing firms strong and stable, which will ensure confidence in these companies. Companies with large capital can withstand any market volatility and achieve better growth.
"With a large capital base, the ability to lend money to a single client goes up. If you have a large capital, your capital adequacy ratio goes up," noted Patel. However, leasing companies need to get a greater volume of business to service a higher capital.
Muscat Finance has a paid up capital of OMR25.16 million, according to the MSM website. Also, United Finance and Taageer Finance have also crossed the minimum stipulated capital of OMR25 million, the MSM website pointed out.
© Times of Oman 2016
