DFCC Vardhana Bank to fund housing sector

Around 80 percent of people do not have access to long-term housing finance, said Asian Development Bank (ADB) country Director, Rita O'Sullivan.

She said that general loans in Sri Lanka are short-term and added that long-term loans are vital to fund the low income segment in the country.

"Access to finance is a huge challenge in Sri Lanka.

Those in the low end do not default," said O'Sullivan.

She was speaking at a ceremony to sign an agreement between the ADB and DFCC Bank for a credit facility of US $ 15 million.

This financing agreement is aimed at developing home ownership, a cause strongly supported by the ADB, a media release from the Bank said.

The bank's strong performance over the past few years along with its robust credit portfolio and widespread 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. The Bank recorded a loan growth of 75 percent which was above the 43 percent increase in the banking sector in 2011.

The facility granted to DVB is expected to be disbursed among young entrepreneurs, first time home ownership by family units, self-employed individuals and women borrowers.

It is stipulated that a quantum of the loans are to be specifically granted to the areas in the North and the East affected by terrorism and other parts in the South and the East of the country devastated by the 2004 tsunami. Five 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 Rs. 2 billion at the prevailing exchange rate will also remain reserved for areas outside the Greater Colombo Area including areas in the North and the East and tsunami affected areas in the South and East.

CEO, DFCC Vardhana Bank, Lakshman Silva said, "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 terrorism or the tsunami in the North and the 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 of 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 the Eastern parts of Sri Lanka have steadily increased in the last three years.