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Our Vision To take Sri Lanka towards REGIONAL DEVELOPMENT BANK… The beginning of Regional Development Bank prosperity by empowering (RDB) goes back to the year 1985, when district people through regional level banks under the category of Regional Rural Development Banks were established. economic development In 1997, seventeen such Regional Rural Development Banks were merged into six Provincial Our Mission Level Banks, namely Rajarata, Ruhuna, Wayamba, Uva, Kandurata and Sabaragamuwa Development To be a strong financial Banks. institution that aims at uplifting These six provincial banks were further merged in the socio-economic status of May 2010, as a national level development bank and named the Pradeshiya Sanwardhana Bank the regions by providing an (Regional Development Bank or RDB). The RDB was established under the Pradeshiya Sanwardhana innovative banking service Bank Act No. 41 of 2008 as a fully State-owned through a dedicated, efficient national level bank with the long-term objective of improving the living standards of the rural masses by and professional staff providing them accessible and affordable financial services that in turn would contribute to uplift the rural economy. Originally based on the ‘barefoot banking concept’, the Bank strives to provide innovative, simple and effective financial instruments (mainly deposit mobilisation and lending) to those at the middle and bottom of the income pyramid. The Bank is keen on empowering its customers in the micro, small and medium-scale industries, women entrepreneurs as well as those in the agriculture, livestock, fisheries and other small industries, all of which in turn would contribute towards the country’s economic development. The Bank has also taken steps to inculcate the savings habit amongst the rural people providing higher returns on savings and fixed deposits, while also encouraging school children and minors to save. Today, with six million loyal account holders complemented by 265 branches and empowered by over 2,300 professional permanent staff members, the RDB continues to implement its vision of providing financial assistance to the rural sector and developing the Nation through this sector, thereby empowering all Sri Lankans. THE REGIONAL DEVELOPMENT BANK’S CORE ETHOS IS CONCERNED WITH THE DEVELOPMENT OF REGIONAL SRI LANKA. OUR BUSINESS IMPULSE IS TO LEVERAGE EVERY AVENUE AND OPPORTUNITY BOTH FROM WITHIN AND OUTSIDE THE REGIONS FOR THE BENEFIT OF THE RURAL MASSES WE SERVE. IT IS THEIR EMPOWERMENT WE ULTIMATELY SEEK AND WITH IT AN EMPOWERED AND FAST DEVELOPING REGIONAL SRI LANKA. CONTENTS Milestones 03 Financial Highlights 05 Chairman’s Statement 06 General Manager/Chief Executive Officer's Review 09 Management Discussion and Analysis Financial Review 14 Customer and Relationship Review 18 Society and Environmental Review 21 Employee Review 28 Products and Services 30 Stewardship Board of Directors 34 Corporate Management Team 40 Regional General Managers/Senior Assistant General Managers 42 Assistant General Managers/Heads of Divisions 44 Risk Management 46 Auditor General’s Report on Corporate Governance 51 Corporate Governance 52 Attendance of the Board and the Board Committees 68 Annual Report of the Board of Directors 69 Audit Committee Report 73 Board Human Resources, Remuneration and Nomination Committee (BHRRNC) Report 74 Board IT Steering Committee (BITSC) Report 75 Integrated Risk Management Committee (IRMC) Report 76 CEO’s and CFO’s Responsibility Statement 77 Directors’ Responsibility for Financial Reporting 78 Auditor General’s Report on Statement on Internal Control 79 Directors’ Statement on Internal Control 80 Financial Reports Auditor General’s Report 84 Income Statement 85 Statement of Comprehensive Income 86 Statement of Financial Position 87 Cash Flow Statement 88 Statement of Changes in Equity 89 Notes to the Financial Statements 91 Three Year Summary 141 Geographical Distribution of Branches 143 Corporate Information Inner Back Cover 2 Regional Development Bank Annual Report 2016 MILESTONES SUCCESS STORY AFTER MERGING SIX PROVINCIAL DEVELOPMENT BANKS AS ONE NATIONAL LEVEL REGIONAL DEVELOPMENT BANK WITHIN SEVEN YEARS AFTER MERGING IN 2010, RDB REACHED TO MORE THAN RS. 100 BILLION DEPOSITS, LOANS & ADVANCES AND TOTAL ASSETS 257% Total Loans and Advances Growth from Rs. 30 billion to Rs. 108 billion 231% Total Deposit Growth from Rs. 32 billion to Rs. 107 billion 219% Total Assets Growth from 474% Rs. 41 billion to Rs. 121 billion Operating Profit Growth 91% from Rs. 371 million to Total Equity Growth from Rs. 2,131 million Rs. 3 billion to Rs. 6 billion Growth from May 2010 to December 2016 Rs. million 150,000 120,000 90,000 60,000 30,000 0 01 May 2010 31 Dec. 2016 Operating Prot 371 2,131 Total Equity 3,148 5,999 Total Assets 41,018 130,914 Total Deposits 32,350 107,032 Total Loans & Advances 30,311 108,103 Regional Development Bank Annual Report 2016 3 MILESTONES Results achieved by Provincial Development Banks FINANCIAL HIGHLIGHTS (i.e., Rajarata, Ruhuna, Wayamba, Uva, Kandurata and zz As a financial institution dedicated to development Sabaragamuwa Development Banks) during the of finance, Regional Development Bank continues to Twenty-Four years’ period from 1985 to 2009, have drastically play a vital role in the uplifting of social and economic improved during the six years’ period (2010-2016) after development activities in the country. The Bank has establishing Regional Development Bank (RDB) in 2010 been in the forefront of almost all the development merging all previous Provincial Development Banks. programmes in the island taking a significant role as a financier. Our key asset is our customer base of over six During May 2010 to December 2016 million spread throughout the country, including North zz Total Deposits of RDB has increased by Rs. 75 billion from and East. Development of the country and its people is Rs. 32,350 million to Rs. 107,032 million. the main focus of the Bank. Hence, the Bank is committed zz Total Loans and Advances of RDB has increased by to empowering them and thereby developing the nation Rs. 78 billion from Rs. 30,311 million to Rs. 108,103 million. through its 265 service centres in the island-wide network. zz Total Assets of RDB has increased by Rs. 90 billion from zz The total income of the Bank has increased by 26%, Rs. 41,018 million to Rs. 130,914 million. compared to the previous year. In the year 2016, operating profit increased to Rs. 2,131 million, which is 44% HISTORY OF RDB over the operating profit of Rs. 1,484 million, recorded in 2015. ROA before tax of the Bank has increased to 1.8% The beginnings of Regional Development Bank (RDB) can be that stood at 1.5% in 2015. traced to 1985 when district level banks under the category of Regional Rural Development Banks were established in terms of the Regional Rural Development Bank Act No. 15 of SUPPORT SERVICES TO OUR CUSTOMERS 1985. Subsequently in 1997, under the Regional Development zz Western Union with NDB – Money transfers through the Bank Act No. 06 of 1997, seventeen Regional Rural Western Union is an easier and speedy way to transfer Development Banks were amalgamated into six provincial funds with total security from any foreign destination to our development banks; Rajarata, Ruhuna, Wayamba, Uva, country and customers are able to collect them through Kandurata and Sabaragamuwa Development Banks. all branches of the RDB which are widely located in rural With the introduction of the Pradeshiya Sanwardena and semi urban areas. Bank Act No. 41of 2008 these six banks were merged in zz Lanka Money Transfer (LMT) with DFCC – Lanka Money to one national entity as Pradeshiya Sanwardhana Bank Transfer remits money directly and instantly to customer (Regional Development Bank) on 01 May 2010. In 2015, RDB bank account with no downtime. Lanka Money Transfer celebrated 30th Anniversary. Being the RDB at national level is with a wide international network consisting of over 275 Government-owned development bank, the objectives of locations and this service is available at 265 RDB branches the Bank shall be to facilitate the overall regional economic island-wide. development of Sri Lanka by promoting the development zz Online Bill Payment Service with Mobitel Mcash – Online activities such as agriculture, industry, trade, commerce, Bill Payment Service facilitates customers to pay utility bills livestock, fisheries and empowerment of women mainly by & Reloads, and update online instantly. granting financial assistance to Micro Financial Institutions zz and small and medium scale enterprises. RDB ATM and LankaPay ATM facility – Now our customers are able to withdraw their money at any one of over 3,000 ATMs island-wide. At around twenty thousand ATM cards have been issued to customers now. 4 Regional Development Bank Annual Report 2016 FINANCIAL HIGHLIGHTS Customer Deposits 2016 2015 Change Rs. ’000 Rs. ’000 % Rs. million 125,000 Operating Results for the Year 100,000 Gross income 15,744,337 12,510,119 26 Operating profit before tax 2,130,568 1,484,064 44 75,000 Taxation 1,489,280 954,913 56 50,000 Profit after tax 641,288 529,152 21 25,000 Profit attributable toS hareholders 518,605 576,338 -10 0 Assets and Liabilities 2015 2016 Customer deposits 107,031,721 87,753,700 22 Loans and advances (Gross) 108,102,760 89,469,402 21 Loans and Receivables Total assets 130,913,984 106,780,543 23 Rs. million 125,000 Total liabilities 124,915,039 101,163,108 23 100,000 Shareholders’ funds 5,998,946 5,617,434 7 75,000 Profitability Return on assets (%) 1.79 1.49 50,000 Return on equity (%) 11.04 9.80 25,000 Non-Performing loans ratio (%) 2.85 4.00 0 2015 2016 Regulatory Ratios Capital adequacy ratio (%) Non-Performing Loans Ratio Tier I (minimum ratio of 5%) (%) 6.50 7.56 % Tier I & II (minimum ratio of 10%) (%) 9.27 10.53 5 Statutory liquid assets ratio (%) 21.25 21.77 4 3 2 1 0 2015 2016 Shareholders' Funds Profit After Tax Operating Profit Before Tax Rs.

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