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For the first time in Sri Lankan Banking history, a local bank has received a rare accolade from the World Bank for its remarkable contribution to the country’s development.

Last week the World Bank’s Sri Lanka office released a publication tracing DFCC Bank’s original mandate, its role and the part it has played on the larger canvas of Sri Lanka’s economic development during the last five decades. The book is titled “DFCC - One Among The Successful Few”.

The Country Director of the World Bank, Ms. Naoko Ishii presented the book to the Chairman of DFCC Bank, J.M.S. Brito at an official ceremony at the Bank’s Headquarters. DFCC, Sri Lanka’s pioneer Development Finance Institution (DFI) completed 50 years of operation in 2006. It has not only continued to remain viable but over the years, has transformed itself into a multi-dimensional, robust financial institution.
The DFCC was established as a consequence of a proposal by the first World Bank mission to Sri Lanka in 1952. DFCC had a unique hybrid structure – comprising elements from the Companies Ordinance act and an Act of Parliament – resulting from the desire of the Government and the World Bank to establish a public-private partnership that would extend financial and other support for development activity undertaken by the private sector.

Many safeguards were built-in to allow support and involvement from the government without bringing in political bias and bureaucratic rigidity.
Having started operations in 1955 with a paid-up capital of only Rs. 8 million, DFCC has played a pioneering role in supporting new entrepreneurs, fueling innovative investment ideas and growing new economic sectors. It recently extended its product range and can now provide a comprehensive package of financial products and services including retail banking.

DFCC has been one of the more profitable institutions quoted in the Colombo Stock Exchange. In terms of market capitalisation, it has consistently been ranked among the first five companies. The record of DFCC nullifies the view that focussing on development banking is incompatible with being profitable. From the country’s point of view, its development role as defined in the Act is still very much in demand and relevant. The challenge is to retain that focus whilst continuing to build on its commercial success.

“We feel greatly privileged” – DFCC Bank chief
Upon being recognized by the World Bank, DFCC Bank Chairman Rajan Brito declared “We feel greatly privileged that the World Bank commissioned this important study on DFCC Bank with a view to describing and assessing the key factors facilitating the relative success of the Bank as a DFI and more recently as a licensed specialised bank in a changing environment.”

He said that many similar institutions established in other parts of the world, most notably following World War II, have today ceased to exist because they have become financially unviable. “DFCC Bank is indeed one among a very small number of DFIs, that has not only continued to remain financially viable, but also has been successful in transforming itself into a multi-product and strong institution while continuing its significant involvement in the country’s development. I believe that this has been the underlying reason for World Bank to commission a study of this nature,” Mr. Brito said.

“Why and how did DFCC Bank succeed when other similar institutions failed? What did it do that other institutions did not, and what did it do differently? What was unique in its structure or governance framework that may have enabled it to withstand more effectively the varied political and other pressures it may have been subjected to as a DFI that worked closely with the government? The study attempts to answer these and similar questions, with a view toward not only understanding the reasons for DFCC Bank’s survival and success but also for learning lessons for the future,” the Chairman said.

He also thanked Ranjit Fernando, the author of this publication. It is significant that Mr Fernando was also the CEO of the National Development Bank of Sri Lanka, which was engaged in the same line of business as the DFCC Bank, and in direct competition with it. “However, Mr Fernando who learnt the basics of development banking at DFCC Bank has done justice to the study and approached it in an objective and unbiased manner,” Mr. Brito said.

DFCC boss also thanked Peter Harrold, former World Bank Country Director for Sri Lanka, who initially identified DFCC Bank as a subject worthy of special study. Current World Bank Country Director Ms Naoko Ishii and her team were also thanked for all the support extended to make this study a reality.