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DFCC Vardhana Bank, backed by the premier development financial institution, DFCC Bank, recently signed an agreement with the Asian Development Bank (ADB), to participate in the Trade Finance Facilitation Program advocated by the ADB. This program will enable banks in 15 developing Asian countries, to facilitate international trade, in partnership with major banks across the globe. The ADB has already entered into agreements with over 50 banks.

DFCC Vardhana Bank and ADB officials at the signing of the agreement. From left L. G. Perera; Managing Director DFCC Vardhana Bank, Ms. Sepali Ranawana; Legal Officer; Dr. Nihal Jinasena; Chairman DFCC Vardhana Bank, Alessandro Pio, Country Director ADB Sri Lanka and Lakshman Silva; Chief Operating Officer DFCC Vardhana Bank.

As part of the program, ADB has provided DFCC Vardhana Bank a Partial Credit Guarantee facility, under which ADB guarantees will be issued in favour of international confirming banks, to support the obligations arising from the establishment of Letters of Credit. A Revolving Credit facility has also been issued by ADB to DFCC Vardhana Bank, in order to facilitate funding to exporters, for their trade finance business at competitive interest rates.

Despite just completing one year of operations, DFCC Vardhana Bank has been assigned a Fitch rating of AA - (Sri) (Double A minus), which indicates a low expectation of credit risk, as well as a strong capacity for timely payment of financial commitments by the bank. During the next few years DFCC Vardhana Bank plans to focus mainly on cross-selling its products to DFCC Bank's prospective customer base.

This potentially creates a high volume of trade finance activities, which has been a significant reason for ADB to consider DFCC Vardhana Bank as eligible for this program. The strong backing provided by DFCC Bank, good corporate governance, and the clear shareholder structure of DFCC Vardhana Bank have also been considered as eligibility criteria by ADB.

"Being a relatively new and small commercial bank, strongly supported by the pioneering development bank DFCC, we are honoured to demonstrate our suitability for this international Facilitation program," Lakshman Silva, Chief Operating Officer of DFCC Vardhana Bank said yesterday.

He said that this program would enable DFCC Vardhana Bank to further strengthen its ability to provide extended trade finance facilities to customers under competitive terms.