DFCC Vardhana Bank qualifies for ADB term lending facility for housing
September 21, 2012
DFCC Vardhana Bank (DVB) recently signed an agreement with the Asian Development Bank (ADB) for an USD 15 Million term lending facility. This financing agreement is specifically aimed at developing home ownership, a cause strongly supported by the ADB.
The banks strong performance over the past few years along with its robust credit portfolio and wide spread customer reach were some of the main reasons behind ADB’s decision to grant the facility to DVB. The bank’s national long-term rating which was recently re-affirmed by Fitch as ‘AA-(lka)’ (stable outlook) with DVB’s subordinated debentures also rated at ‘A+(lka)’, too impacted positively on ADB’s decision to offer the Term Lending facility to DVB. DVB one of Sri Lanka’s fastest growing banks recorded an outstanding loan growth of 75%, which was above the 43% increase in the banking sector in 2011.
The facility granted to DVB is expected to be disbursed amongst young entrepreneurs, first time home ownerships by family units, self-employed individuals and women borrowers. Additionally it is stipulated that a quantum of the loan is to be specifically granted to the north and East areas affected by the conflict and other parts in the South and East of the country devastated by the 2004 tsunami. 5.0 percent of the loans will be allocated to women borrowers and single mothers and a minimum of 30 percent of the total loan which converts to approximately LKR 2 Billion at the prevailing exchange rate will also remain reserved for areas outside the Greater Colombo Area including areas in the in the North and the East and tsunami affected areas in the South and East.
Mr.Lakshman Silva, CEO, DFCC Vardhana Bank stated: DVB looks forward to supporting all individuals who aspire to build their own homes and would give preference to those who have been affected by either the conflict or the tsunami in the North and East in keeping with the ideals of the Asian Development Bank. As a responsible institution we are very happy to be part of this scheme which will give life to the dreams many who aspire to have a place of their own and be the catalyst in bringing joy and stability to them as individuals while also being able to be a partner in the country‘s economic resurgence
The requirements for housing loans in the northern and eastern parts of Sri Lanka have steadily increased in the last three years and this facility will be a much needed boon to meet this increased requirement. Moreover the loan supports the Governments endeavour for Sri Lanka’s overall relief and rehabilitation in the post conflict regions by improving living conditions for those affected.
Further commenting on this initiative Mr. J.M.S Brito, Chairman of DFCC and DFCC Vardhana Bank stated: ‘‘Indirect development impacts of housing finance include the contribution of the construction sector to the country’s overall economic growth and employment generation. This scheme will provide a vital platform to kick-start home building, bring about stability to the lives of many and to kindle a new round of economic activity for the region and country at large. We are quite excited with the prospect of being able to be directly involved with such an initiative and thank the ADB for having placed their confidence in us to partner in this truly satisfying and much needed endeavour.’’
DFCC VardhanaBank, a relatively young bank with a country wide Branch network, driven by state of the art technology that gives their customers connectivity with an extensive network of ATM’s and online banking is well positioned to reach the customer segments envisaged by the ADB for these housing loans. Housing Loans are an integral part of the gamut of personal banking products required by the public and the ADB Term Lending Facility will enable DVB to reach out further into developing communities in Sri Lanka.
Currently Sri Lanka’s mortgage debt to gross domestic product ratio stands at 6.0 percent compared to a global average of 30 percent. Only an estimated 20 percent of the population presently has access to housing loans. Sri Lanka is estimated to need between 350,000 to a million units of housing, which is stated to increase by 100,000 in a year. The term lending facility by ADB has been received at an opportune time for DVB where its loan portfolio could grow above the 18% growth ceiling imposed by the Central Bank on the strength of its acquisition of a foreign funding line. This extra funding ability gives DVB a distinct competitive advantage above many other commercial banks who have reached their CBSL imposed credit ceiling.
Home loan borrowers would also welcome DVB’s enhanced lending capacity as they could benefit from the present lower prices in the housing market. This is a unique quadruple win situation where the lending organization ADB, the facilitating bank DVB, the borrowers and the nation at large will be happy with the results brought about by this Term Lending Facility.
Mr.J.M.S.Brito – Chairman DFCC & DFCC Vardhana Bank & Ms.Rita O’Sullivan Country Director, Asian Development Bank exchanging the agreement
Presenting at the head table Mr. J.M.S Brito – Chairman DFCC and DFCC Vardhana Bank, Mr. Lakshman Silva – CEO, DFCC Vardhana Bank, Ms. Rita O’Sullivan – Country Director, Asian Development Bank, and Ms. Samantha Lindsay – External Relations Officer, Asian Development Bank