Loan Demand

June 6, 2014 (LBO) – Sri Lanka’s DFCC says it has seen a sharp rise in credit demand with new approvals rising to 34.6 billion rupees from 23.4 billion rupees a year earlier, though draw downs are just picking up. DFCC Bank group which has assets of 177 billion rupees said amid a rise of all facilities including leases and investment securities to 34.6 billion rupees, project loan approvals alone rose to 30.1 billion rupees from 16.7 billion rupees.

Due to a “typical lag in project financing” the portfolio has only grown to 67.8 billion rupees from 64.8 billion rupees, the bank said.

The bank has raised funds including from foreign services to cater to an expected pick up in credit. If necessary it can also sell down its share portfolio to raise cash, the bank said.

Sri Lanka is recovering from a balance of payments crisis, triggered mainly by state bank credit given to subsidize energy through state owned enterprises, which in turn were ultimately accommodated via central bank credit.

In the last year many banks were also cutting down pawning or gold-backed loans, after gold prices fell in the world market.

DFCC and NDB, both originally conceived as ‘development banks’ are on track to be