DFCC Bank in forefront of development lending

DFCC Bank, the only national level development bank in Sri Lanka which has been vigorously pursuing its development lending role over the last 55 years, has made an unmatched contribution to the country's development efforts. During the first two decades since independence, the country was predominantly following a closed economic policy with public sector being given the major responsibility of spearheading the growth in almost all economic sectors.

DFCC was the only bank which was supporting the development oriented projects in the private sector even during that time. Although post 1977 liberalisation and associated private sector centric policies gave prominence to the private sector, the emergence of civil war and political instability retarded the enthusiasm of the private sector. Yet, the economy continued to grow displaying the resilience of Sri Lankan economy even in worst environments maintaining an average GDP growth rate of 4-6% over the last two decades.

The role played by DFCC Bank during such adverse economic conditions has immensely helped the momentum to be maintained with the bank encouraging entrepreneurs undertaking start up risk of capital investments at the initial stages of such investments.

DFCC Bank has been instrumental in developing some of the industry and service segments from a stage where neither banks nor entrepreneurs were confident in making investments to a stage where such sectors have now become part of the life line of Sri Lankan economy. Prominent among such sectors which were born as a result of DFCC Bank sharing initial risks include hotels and tourism, ready-made garments, privately owned tea plantations and factories, renewable energy and mini hydro industry. Most of the pioneering hotel projects and ready-made garment industries set up in the initial phase of development of those industries came into being with DFCC Bank undertaking not only the risks of loan capital but also taking equity risk by contributing to both ordinary and preference share capital of start-up ventures.

It is only after those pioneering ventures became success stories that other banks joined in funding similar ventures. The mini hydro industry which today has assumed financial and national significance was pioneered by DFCC Bank sharing the initial risks with active equity participation in addition to providing technical and financial assistance. Such innovative and participatory approach by DFCC Bank contributed to the resilience of economic activities in the country even during most unfavourable periods.

With the ending of civil conflict and emergence of political and social stability Sri Lanka has not seen for almost three decades, the economy is now poised to take an unprecedented growth path aided by massive infrastructure initiatives launched by the Government amidst an expensive and decisive war effort.

If the country is to realize the full benefits of the emerging opportunities, banks have to play a major role in facilitating private sector investments.

DFCC Bank with its enormous resource base and expertise accumulated over a period of 55 years as one of the oldest development banks in the Asian region is gearing itself to be the catalyst in the new development phase.