ADB said it the loan from its private sector arm, demand for housing in the north and the east has increased after the end of a 30-year conflict in 2009, which has improved consumer sentiment, increased incomes.

"In order to properly rebuild their lives, Sri Lankans affected by conflict or natural disasters need fair and secure access to home loans," Philip Erquiaga, director general of ADB’s private sector operations department said in a statement.

"A well-functioning mortgage system with greater commercial bank participation will help reach these often underserved borrowers and help close the market gap."

ADB said DFCC Vardhana is a medium-sized bank with a niche strategy to serve the underserved segments. It had a good credit standing and had a 1.3 percent market share of total banking loans in Sri Lanka.

The bank was expanding its network in post-conflict areas and had received technical support from the ADB to improve is mortgage loan operations.

ADB said 5.0 percent of the loans would be given to women including those who were widowed by the war.

Another 30 will go to areas post conflict areas in the north and the east and tsunami affected areas in the south.

ADB said Sri Lanka's mortgage to debt to gross domestic product ratio was 6.0 percent compared to a global average of 30 percent.

"It is estimated that only 20 percent of the population has access to housing loans as banks prefer to serve only large, top-tier companies and higher-income customers," ADB said.

ADB said Sri Lanka was estimated to need between 350,000 to a million units of housing, which increased by 100,000 a year.