Untitled - Colombo Stock Exchange

Registered Ofice 

No. 4, Bank of Ceylon Mawatha, Colombo 01, Sri Lanka. www.boc.lk 

2519401-3 

Tel:- Ltd, (Pvt) aphics Gr 

Managers to the issue: 

Udaya :- 

Investment Banking Division 

By 

Bank of Ceylon 

23rd Floor, Head Ofice, Colombo 01. 

Printed & 

Tel : +94 11 2542167 / 2448348 

Fax : +94 11 2448342 oncepted C 

Debenture Isue 

PROSPECTUS 

Bank of Ceylon

` 

ISSUE OF 30,000,000 UNSECURED SUBORDINATED REDEEMABLE FIVE YEAR 

DEBENTURES AT AN ISSUE PRICE OF LKR 100 EACH 

(WITH AN OPTION TO ISSUE UPTO A FURTHER 20,000,000 OF THE SAID 

DEBENTURES IN THE EVENT OF AN OVERSUBSCRIPTION OF THE 30,000,000 

DEBENTURES) 

TO BE LISTED ON THE MAIN BOARD 

OF THE DEBT SECURITIES TRADING SYSTEM OF 

THE COLOMBO STOCK EXCHANGE 

ISSUE OPENS ON 01 st JUNE 2010 

Managers, Bankers to the issue 

Bank Of Ceylon 

No 04 

Bank Of Ceylon Mawatha 

Colombo 01 

Tel: 2542167 

2448348 

2446790-811

THE COLOMBO STOCK EXCHANGE (CSE) HAS 

TAKEN REASONABLE CARE TO ENSURE FULL AND 

FAIR DISCLOSURE OF INFORMATION IN THIS 

PROSPECTUS. HOWEVER, THE CSE ASSUMES NO 

RESPONSIBILITY FOR THE ACCURACY OF THE 

STATEMENT MADE, OPINIONS EXPRESSED OR 

REPORTS INCLUDED IN THE PROSPECTUS. 

MOREOVER, THE CSE DOES NOT REGULATE THE 

PRICING OF THE DEBENTURE, WHICH IS DECIDED 

SOLELY BY THE ISSUER.

PROSPECTUS 

This Prospectus is dated 14 th May 2010. 

This Prospectus has been prepared by the Bank of Ceylon (hereinafter sometimes referred to 

as “BOC “or “the Bank”). BOC and its Directors confirm that to the best of our knowledge 

and belief, the information contained herein is true and correct in all material respect and that 

there are no other material facts, the omission of which would make any statement herein 

misleading. While BOC has taken reasonable care to ensure full and fair disclosure, it does 

not assume responsibility for any investment decision made by the investors based on the 

information contained herein. In making investment decisions prospective investors must rely 

on their own examination and assessments on BOC and the terms of the Issue, including the 

risks associated. 

No dealer, sales person or any other person has been authorized to give any information or to 

make any representation in connection with the Debentures other than the information and 

representations contained in this Prospectus and if given or made such information or 

representations must not be relied upon as having been authorized by BOC. 

The reporting Accountants and Auditors of BOC, the Managers, Sponsors and registrars to 

the Issue, Trustee, Lawyers to the Issue and the Rating Agency have given their written 

consent for the inclusion of their names and their reports/statements in the Prospectus. 

This Prospectus has not been registered with any authority within or outside Sri Lanka. 

The delivery of this Prospectus shall not under any circumstance constitute a representation 

or create any implication or suggestion that there has been no material change in the affairs 

of Bank of Ceylon since the date of this Prospectus. 

If you are in any doubt regarding the contents of this document or if you require any 

clarification or advice you may consult your Stockbroker, Bank Manager, Lawyer or any other 

Professional Advisor in this regard.

CORPORATE INFORMATION 

Issuer : Bank of Ceylon 

Legal Form : A Banking Corporation domiciled in Sri 

Lanka, Duly incorporated on 1 August 1939 

under the Bank of Ceylon Ordinance No 53 

of 1938. 

Registered Office & Head Office : Bank of Ceylon 

No 04 Bank of Ceylon Mawatha 


Tel : +94 11 2446790-811 

Fax : +94 11 2338741-55 

E-mail : gm@boc.lk 

Website : http://www.boc.lk 

Branch Offices : Refer Annexure 1V 

Board of Directors : Dr Gamini Wickramasinghe (Chairman) 

Dr R H S Samaratunga 

Mr. Chaminda Kumara Kularatne 

Mr. Gunarathna Gallage 

Mr. Raju Sivaraman 

Dr Buddhadasa Kaluarachchi 

Secretary to the Board : Mrs. Janaki Senanayake Siriwardane 

Lawyers : Mr. M Kiritharan, Chief Legal Officer of 

Bank of Ceylon and his Subordinates 

Auditors/Reporting Accountants : The Auditor General of Sri Lanka 

Trustee to the Issue : Deutsche Bank AG, Colombo Branch 

No 86 Galle Road 


Bankers to the Issue : Bank of Ceylon 

Corporate Branch 

No. 04, Bank of Ceylon Mawatha 


Tel: 2471613, 2345428 

Rating Agency : Fitch Ratings Lanka Ltd. 

No 15-04 East Tower 

World Trade Center 


Tel: 2541900 

Managers, Sponsors & Registrars : Bank of Ceylon 

to the Issue Investment Banking Division 

23 rd Floor 

No. 4, Bank of Ceylon Mawatha 


Tel: 2 542 167 

2 448 348 

2 446 790-811

SALIENT FEATURES AT A GLANCE 

Instrument : Unsecured Subordinated redeemable Five 

(05)Year Debentures, categorized as 

Debentures of Type A and Type B as 

described below. These debentures will be 

listed on the main board of the Debt System 

of the Colombo Stock Exchange. 

Type A 

Unsecured Subordinated redeemable Five 

(05) Year Debentures, of LKR 100 each 

bearing interest at a fixed rate of Eleven and 

half percent (11.5%) per annum on the 

Principal sum payable annually at the expiry 

of every One (01) year period from the date 

of allotment of the Debentures. 

Type B 

Unsecured Subordinated redeemable Five 

(05) Year Debentures, of LKR 100 each 

bearing interest on the Principal sum at a 

floating rate calculated on the basis set out 

below, payable bi-annually at the expiry of 

every Six (06) month period from the date of 

allotment of the Debentures. 

Face value of each Debenture : Types A and B – LKR 100 

Issue Price : All types of Debentures will be issued at LKR 

100 each. 

Amount to be raised : LKR 3.0 Billion with an option to raise up to a 

further sum of LKR 2.0 Billion in the event of 

an full subscription of Rs.3.0 Billion. 

Rate of Interest (Yield) : Type A 

A fixed rate of Eleven and half per cent 

(11.5%) per annum on the Principal sum 

payable annually at the expiry of every One 

(01) year period from the date of allotment of 

the Debentures. 

Type B 

A floating rate of interest equivalent to 

Seventy Five basis points (0.75%) above the 

Weighted Average Six (06) Months Treasury 

Bill interest rate (Before Tax) at the Primary 

Auctions as announced by the Central Bank 

of Sri Lanka at the preceding week of the 

interest resetting date for each bi-annual 

period. This rate will be initially decided on 

the date of allotment of the Debentures and 

be applicable for a period of Six (06) Months

Opening Date : 01 st June 2010 

commencing from the date of allotment of 

the Debentures and thereafter to be 

determined/revised bi-annually at the expiry 

of every Six (06) Month period from the date 

of allotment of the Debentures on the same 

basis. The interest rates so established shall 

be notified by BOC to the CSE and the 

Trustee prior to the commencement of each 

bi-annual period. 

Provided that if such Weighted Average Six 

(06) Months Government of Sri Lanka 

Treasury Bill interest rate has not been 

announced at the preceding week of the 

interest resetting date for a particular biannual 

period, then BOC shall in 

consultation with the Trustee calculate the 

interest rate applicable for that bi-annual 

period based on the Weighted Average Six 

(06) Months Treasury Bill interest rate 

(before Tax) at the last Primary Auction as 

announced/published by the Central Bank of 

Sri Lanka before the interest resetting date. 

The interest rates so established shall be 

notified by BOC to the CSE prior to the 

commencement of the particular bi-annual 

period. 

Interest payments shall fall due bi-annually 

at the expiry of every six (06) month period 

from the date of allotment of the Debentures. 

Closing Date : 18 th June 2010 or such earlier date on which 

the initial 30,000,000 Debentures are over 

subscribed or the date on which the entire 

50,000,000 Debentures are fully subscribed 

or such other earlier date in terms of this 

prospectus. 

Basis of Allotment : In the event of an over subscription the basis 

of allotment will be decided by the Board of 

Directors of BOC within 7 market days from 

the date of closure of the issue. 

Minimum Subscription : The minimum subscription per application is 

LKR 10,000 or 100 debentures. 

Applications in excess of the minimum 

Subscription shall be in multiples of Rupees 

Ten Thousand (LKR 10,000) or Hundred 

(100) Debentures 

Date of Maturity : On completion of Five (05) years from the 

date of allotment of the Debenture



























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1. DEFINITIONS / ABBREVIATIONS AND INTERPRETATIONS 

In this prospectus the following DEFINITIONS / ABBREVIATIONS and INTERPRETATIONS apply 

unless the subject or context otherwise requires. 

BOC /THE BANK : Bank of Ceylon 

DATE OF ALLOTMENT : The date on which the Debentures will be allotted to the 

debenture holders in terms of this prospectus which date 

will be stated in the Debenture certificate. 

DATE OF CLOSURE OF THE ISSUE : The date on which the issue will be closed which shall be 

either 18 th June 2010 or such earlier date on which the 

initial 30,000,000 Debentures are fully subscribed or the 

date on which the entire 50,000,000 Debentures are fully 

subscribed or such other earlier date in terms of this 

prospectus. 

DATE OF MATURITY : On completion of Five (05) years from the date of 

allotment of the Debentures. 

DEBENTURE : All types of Unsecured Subordinated redeemable Five 

(05) Year Debentures to be issued pursuant to this 

Prospectus at an Issue price of LKR 100 each. 

DEBENTURE HOLDERS : The holders of the Debentures for the time being whose 

names are entered as holders of the Debentures in the 

Register or in the case of Debentures lodged with the 

CDS, the persons in whose accounts the Debentures are 

lodged as at the relevant date. 

DUE DATE OF INTEREST : The dates on which the interest payments shall fall due 

in respect of the Debentures. 

Interest payments shall fall due in respect of Debenture 

of, 

• Type A, annually at the expiry of every One (01) 

year period from the date of allotment of the 

Debentures. 

• Type B, bi-annually at the expiry of every Six 

(06) month period from the date of allotment of 

the Debentures. 

The first of such interest payment shall fall due in respect 

of Debentures of Type A on the date of expiry of One 

(01) year and in respect of Debentures of Type B on the 

date of expiry of Six (06) months from the date of 

allotment of the Debentures, interest payments shall be 

made by BOC within Five (05) market days from the due 

dates. 

The final interest payments in respect of Debentures of 

Types A and B shall be made with the repayment of the 

Principal sum on the date of maturity/redemption of the 

debentures. 

Interest calculation shall be based upon the actual 

number of days in each interest payment period 

(Actual/Actual). 

B O C DEBENTURE PROSPECTUS 1

LKR : Sri Lankan Rupees 

MN : Million 

BN : Billion 

POA : Power of Attorney 

In order to accommodate the Debenture interest cycles 

in the Debt Securities Trading system of the CSE the 

payment of interest shall not include Debenture holders 

holding debentures in the CDS as at the last day of the 

payment cycle but one day prior to the due date of 

interest (entitlement date). If the entitlement date is a 

holiday interest shall be calculated including the 

entitlement date. 

REDEMPTION : Repayment of the principal monies on these Debentures 

REGISTER : The Register of the Debenture Holders to be kept by BOC 

SEC : Securities & Exchange Commission of Sri Lanka 

CSE : Colombo Stock Exchange 

CDS : Central Depository Systems (Pvt) Limited 

DEX : Debt Securities Trading System of the 

Colombo Stock Exchange 

TRUSTEE : Deutsche Bank AG, Colombo branch 

TRUST DEED Trust Deed executed between Bank of Ceylon and the 

Deutsche Bank AG, Colombo branch in 14 th May 2010 

bearing No 01/2010. 

UNSECURED : Repayment of the principal and interest on these 

Debentures not being secured by any specific asset of 

Bank of Ceylon. 

WORKING DAY : Any day (other than a Saturday or a Sunday or any 

statutory holiday) on which the Banks and Foreign 

Exchange markets are open for business in Sri Lanka. 

MARKET DAY : Any day on which trading takes place at the CSE. 

SUBORDINATE : The Claims of the Debenture holders shall in the event of 

winding up of BOC, rank after all the claims of the 

Secured and Unsecured Creditors of BOC and any 

preferential claims under any Statutes governing BOC 

but in priority to and over the claims and rights of the 

Shareholder of BOC. 

TIER II CAPITAL : Supplementary capital representing revaluation reserves, 

general provisions and other capital instruments which 

combine certain characteristics of equity and debt such 

as hybrid capital instruments and subordinated term 

debts. 

2 

B O C DEBENTURE PROSPECTUS

2. INFORMATION CONCERNING THE ISSUE 

2.1 Invitation to Subscribe 

The Board of Directors of the Bank of Ceylon (hereinafter referred to either as “BOC” or 

“Bank”) by a resolution passed on 21 st January 2010 resolved to borrow a sum up to LKR 

5.0 Billion from the public by the issue of Unsecured Subordinated Redeemable Five Year (5year) 

Debentures. 

BOC hereby invites the public to make applications for the subscription of 30,000,000 (Thirty 

Million) Unsecured Subordinated Redeemable Five Year (5-year) debentures at an issue 

price of LKR 100 each payable in full as outlined in this Prospectus, with an option to issue up 

to a further 20,000,000 (Twenty Million) Debentures in the event of an over subscription of the 

30,000,000 Debentures. 

BOC invites applications for two (02) types of Debentures described below, which shall rank 

equal and pari passu with each other, without any preference or priority one over the other 

except for the interest coupon offered and the frequency at which the interest is paid. 

Debenture Types/categories 

TYPE A Unsecured Subordinated Redeemable Five Year (5-year) debentures of LKR 

100 each bearing interest at a fixed rate of eleven and half per cent (11.5%) 

per annum on the Principal sum payable annually at the expiry of every One 

(01) year period from the date of allotment of the Debentures. 

TYPE B Unsecured Subordinated Redeemable Five Year (5-year) debentures .of LKR 

100 each bearing interest on the Principal sum at a floating rate calculated on 

the basis set out in Clause 2.4 of this Prospectus, payable bi-annually at the 

expiry of every Six (06) month period from the date of allotment of the 

Debentures. 

. 

The tenure of these Debentures will be five (05) years from the date of allotment of the 

Debentures 

The repayment of the Principal and Interest on these Debentures are not being secured by 

any specific assets of BOC. 

These Debentures will be listed on the Main Board of the Debt Trading System of the CSE. 

The rights of the Debenture holders for receipt of the Principal Sum and any accrued interest 

on these Debentures in the event of winding up of BOC would be subordinated to the rights of 

the Secured and other Unsecured Creditors of BOC and any preferential claims under any 

statutes governing BOC. Therefore the claims of these Debenture holders shall in the event of 

winding up of BOC rank after all the claims of the Secured and other Unsecured Creditors of 

BOC and any preferential claims under any statutes governing BOC but in priority to and over 

the claims and rights of the shareholder of BOC. 

2.2 Subscription List 

Subject to the provisions contained below, the subscription list for the Debentures will open at 

9.30 a.m. on 01 st June 2010 and shall remain open for 14 market days until closure at 4.30 

p.m. on 18 th June 2010. 

In the event of an over-subscription of the 30,000,000 Debentures, the subscription list will 

close at 4.30 p.m. on the same day on which it is fully subscribed, with the notification of CSE, 

unless otherwise decided by the Bank to keep the subscription list open until subscription of a 


further 20,000,000 Debentures or part there of as may be decided by the Bank. In such event 

the subscription list will close at 4.30 p.m. on the day on which a further 20,000,000 

Debentures or part thereof as may be decided by the Bank have been subscribed, with the 

notification of CSE or on 18 th June 2010 whichever is earlier. 

Applications may be made forthwith. Duly completed applications in the manner set out under 

the Procedure for Application in Section 3 on page 9 of this Prospectus will be accepted. 

2.3 Objectives of the Issue 

a) To increase the Tier II capital of the Bank in order to enhance its Capital 

Adequacy Ratio and Single Borrower Limit. 

b) To strengthen the Bank’s liquidity position by raising liquid funds. 

c) To minimize the risk and gap exposure in the Bank’s assets/liability portfolios. 

d) To provide an opportunity for the investors to yield attractive regular returns over a 

period of five years. 

Proceeds will be utilized mainly for expansion of loan book and to reduce volatile short term 

borrowings 

2.4 Interest 

4 

Interest payable in respect of Debentures of Types A and B shall be as follows: 

Type A Interest on these debentures shall be paid at a fixed rate of Eleven and half 

percent (11.5%) per annum on the principal sum annually at the expiry of 

every One (01) year period from the date of allotment of the Debentures. 

Type B Interest on these Debentures shall be paid on the Principal sum at a floating 

rate equivalent to Seventy Five basis points (0.75%) above the Weighted 

Average Six (06) Months Treasury Bill Interest rate (Before Tax) at the 

Primary Auctions as announced by the Central Bank of Sri Lanka at the 

preceding week of the interest resetting date for each bi-annual period. This 

rate will be initially decided on the date of allotment of the Debentures and be 

applicable for a period of Six (06) Months commencing from the date of 

allotment of the Debentures and thereafter to be determined/revised biannually 

at the expiry of every Six (06) months period from the date of 

allotment of the Debentures on the same basis. The interest rates so 

established shall be notified by BOC to the Colombo Stock Exchange and the 

Trustee prior to commencement of each bi-annual period. 

Provided that if such Weighted Average Six (06) months Government of Sri 

Lanka Treasury Bill Interest Rate has not been announced at the preceding 

week of the interest resetting date for a particular bi-annual period, then BOC 

shall in consultation with the Trustee calculate the interest rate applicable for 

that bi-annual period based on the Weighted Average Six (06) months 

Treasury Bill Interest rate (Before tax) at the last Primary Auction as 

announced/published by the Central Bank of Sri Lanka before the interest 

resetting date. The interest rates so established shall be notified by BOC to 

the Colombo Stock Exchange prior to the commencement of the particular biannual 

period. 

Interest payments shall fall due bi-annually at the expiry of every Six (06) 

month period from the date of allotment of the Debentures. 


The first of such interest payments shall fall due in respect of Debentures of Type A on the 

date of expiry of One (01) year and in respect of Debentures of Type B on the date of expiry 

of Six (06) months from the date of allotment of the Debentures. Interest payments shall be 

made within Five (05) market days from the due dates. The final interest payments in 

respect of Debentures of Types A and B shall be made with the repayment of the Principal 

sum on the date of maturity/redemption of the Debentures. 

In order to accommodate the debenture interest cycles in the Debt Security Trading System 

of the CSE the payment of interest shall not include debenture holders holding Debentures in 

the CDS as at the last day of the payment cycle but one day prior to the due date of 

interest (entitlement date). If the entitlement date is a holiday interest shall be calculated 

including the entitlement date. 

Interest calculation shall be based upon the actual number of days in each interest payment 

period (actual/actual). 

2.5 Payment of the Principal Sum and Interest 

(a) Payment of the principal sum and interest on the Debentures will be made after deducting any 

withholding tax and any other taxes and charges thereon (if any) in Sri Lankan Rupees to the 

Debenture holders (in the case of joint Debenture holders to the one whose name stands first 

in the register of Debenture holders) registered as at the due date of interest/Principal sum 

and will be sent by ordinary mail to their addresses registered with BOC/CDS at the risk of 

such Debenture holders, by crossed cheques marked “Account Payee Only”. 

(b) Withholding Tax 

As per the prevailing tax legislation in Sri Lanka, interest payments on the Debentures are 

subject to 10% withholding tax. 

In the case of corporate entities and other persons to whom such interest income constitute 

as “business income”, a credit for the tax withheld would be available on furnishing the 

withholding tax certificate. 

2.6 Redemption 

BOC shall redeem the Debentures of Types A and B at LKR 100 per Debenture and at the 

expiry of five (05) years from the date of allotment of the Debentures (i.e. on the date of 

maturity) or on such other earlier date on which the Debentures become payable in 

accordance with the provision contained in the Trust Deed (Annexure II). 

Repayment before the maturity of the Principal Sum of the Debentures or any part thereof in 

any circumstance shall be subject to the prior approval of the Debenture holders of 3/4 th of the 

face value of the Debentures outstanding at that time and the prior written consent of the 

Central Bank of Sri Lanka. 

2.7 Trustee to the Issue 

Deutsche Bank AG, Colombo branch has agreed in writing to act as the Trustee to this 

Debenture Issue and has issued a consent letter to this effect. The Bank and the Trustee 

have executed a Trust Deed as per Annexure II. The Debenture holders in their application 

for subscription will be required to, irrevocably authorize the Trustee, subject to any overriding 

clauses in the Trust Deed to act as their agent in entering into such deeds, writings and 

instruments with the Bank and to act as the Trustee for the benefit of and Interest of the 

Debenture holders on the terms and conditions contained in the said Trust Deed. 


The rights and obligations of the Trustee are set out in the Trust Deed, which is enclosed as 

Annexure II to this prospectus. 

2.8 Rights of the debenture holders 

a) Debenture holders are entitled to the following: 

Receiving the Principal Sum at maturity and interest on the Debentures as per Section 2.4 

of this Prospectus. 

Ranking above the shareholder (Government of Sri Lanka) in the event of liquidation 

Receiving the Annual Report and Interim financial statements of BOC 

Calling and attending meetings of the Debenture holders as set out in the Trust Deed. 

b) Debenture Holders are not entitled to the following: 

Attending and voting at the meetings of the holders of the other Debentures issued by the 

Bank. 

Sharing in the profits of the Bank. 

Participating in any surplus in the event of liquidation. 

c) Holders of other Debt Securities have the same right as above 

2.9 Risk factors specifically associated with the Debentures 

6 

Subscribers to the Debentures will be exposed to the following risks: 

(It is vital to note however that these risks are not unique to BOC Debentures and apply 

generally to any unsecured fixed income security, fixed deposit or any other term or money 

deposit) 

(i) Interest Rate Risk 

The price of a typical Debenture will change in the opposite direction to a change in the 

market interest rates assuming all other factors are equal. “Market Interest Rate” refers to 

interest rate expected by the investors for investments with similar maturity and risk profile. As 

market interest rates rise, price of the Debenture may fall and as market interest rates fall, the 

price of the Debenture may rise. If an investor sells a Debenture prior to maturity when 

market interest rate is higher than BOC Debenture interest rates, the investor may incur a 

capital loss. Similarly, if an investor sells a Debenture prior to maturity when market interest 

rate is lower than the BOC Debenture interest rate, then the investor may receive a capital 

gain. This uncertainty is known as interest rate risk. 

Further, if the six months Treasury Bill rate plus 75 basis points rise above the fixed rate of 

the debentures, the floating rate investor will gain more than the fixed rate investor whilst if 

the six month Treasury Bill rate plus 75 basis points fall below the fixed rate of the Debenture, 

the floating rate investor would earn an interest below the fixed rate investor. 

(ii) Reinvestment Risk 

BOC shall pay interest on the Debentures of Type A and Type B annually and bi-annually 

respectively. The investor may decide to reinvest this interest payment and earn interest on 

interest. Depending on the prevailing market interest rates, the Debenture holder may be able 


to reinvest the paid interest at a higher or lower interest rate than that is offered by the BOC 

Debenture. This uncertainty is known as “reinvestment risk “. 

(iii) Default Risk 

Default risk also known as Credit risk, refers to the risk that the issuer of a Debenture may 

default. I.e. the issuer will be unable to pay interest and principal when due. It is advisable for 

prospective BOC Debenture investors to take into account past earnings and asset growth 

performance of BOC, present financial strengths as reflected in the Balance Sheet of the 

Bank, its Risk Management Policies, Fitch Rating of AA for BOC, and the highly experienced 

and skilled Directors and Senior Management Team and finally state ownership when forming 

an opinion on Default Risk. 

(iv) Liquidity Risk 

Liquidity Risk refers to the ability to encash the Debenture by selling it since the initial 

placement. As the Debenture instrument is listed on the CSE, investors will be able to sell 

them in the secondary market at any given point of time and convert them to cash. Hence the 

BOC Debentures carry low liquidity risk. 

2.10 Benefits of investing in the Debentures 

An attractive interest income for a period of five years. 

Opportunity to realize capital gain according to interest rate fluctuations in the financial 

markets. 

Capacity to exit from the investment at any time. 

Can be used as collateral to obtain credit facilities from banks and financial institutions. 

2.11 Transfer of the Debentures 

There are no statutory restrictions on the free transferability of the Debentures so long as they 

are transferred by and between investors categorized under Section 3.2 (a), (b) and (c) of this 

Prospectus. 

The Debentures shall be transferable and transmittable in the manner set out in the 

conditions printed on the Debenture Certificates, which are reproduced below: 

a. These Debentures shall be freely transferable and the registration of such transfer 

shall not be subject to any restriction, save and except to the extent required for 

compliance with statutory requirements. 

b. The Debentures shall be transferable and transmittable through the CDS as long as 

the Debentures are listed in the CSE. Subject to the provisions contained herein 

BOC may register without assuming any liability any transfer of Debentures, which 

are in accordance with the statutory requirements and rules and regulations in force 

for the time being as laid down by the CSE, SEC, and the CDS. 

c. In the case of the death of a Debenture holder, 

the survivor where the deceased was a joint holder; and 


2.12 Listing 

the executors or administrators of the deceased or where the administration of the 

estate of the deceased is in law not compulsory, the heirs of the deceased where 

such Debenture holder was the sole or only surviving holder; shall be the only 

persons recognized by BOC as having any title to his/her Debentures. 

d. Any person becoming entitled to any Debenture in consequence of bankruptcy or 

winding up of any Debenture holder, upon producing proper evidence that he/she 

sustains the character in respect of which he/she proposes to act or his/her title as 

the Board of Directors of BOC thinks sufficient, may at the discretion of the Board be 

substituted and accordingly registered as a Debenture holder in respect of such 

Debentures subject to the applicable laws, rules and regulations of BOC, CDS, CSE 

and SEC. 

e. No change of ownership in contravention of these provisions will be recognized by 

BOC. 

An application has been made to the CSE for permission to deal in and obtain a listing for 

these Debentures. Such permission will be granted when the Debentures are listed on the 

Main Board of the Debt System of the CSE. However the CSE assumes no responsibility for 

the accuracy of the statements made or opinions expressed or reports included in this 

prospectus. Admission to the Main Board is not to be taken as an indication of the merits of 

BOC or of these debentures. 

2.13 Rating of the Instrument 

Fitch Ratings Lanka Ltd (FRLL) has assigned an AA (-)(lka) rating to the Debenture 

instrument. The Rating report issued by FRLL is set out in Annexure III. 

2.14 Transactions with Directors/Promoters 

8 

Bank has not undertaken any special transactions with Directors /promoters except for arm 

length transaction done at the ordinary course of business within two proceeding years of 

Prospectus. Accordingly this negative confirmation includes all transactions fall under section 

3.2.17 of listing rules. 


3. PROCEDURE FOR APPLICATION 

3.1 Prospectus and Application Forms. 

Copies of the Prospectus and the Application Forms may be obtained free of charge from the 

following places/Institutions: - 

a) Registered Office/Head Office of the Bank. 

b) All Branches of the BOC listed in Annexure IV 

c) Member firms and Trading Members of the Colombo Stock Exchange listed in Annexure V. 

3.2 Who may apply? 

Applications are invited for the subscription of the Debentures from the following categories of 

applicants: 

a) Citizens of Sri Lanka who are resident in Sri Lanka and above 18 years of age. 

b) Corporate bodies and societies registered / incorporated / established in Sri Lanka and 

authorized to invest in Debentures. 

c) Approved provident funds, trust funds and contributory pension schemes 

registered/incorporated / established in Sri Lanka and authorized to invest in Debentures. 

Applications will not be accepted from foreign citizens, non-residents and individuals under 

the age of 18 years or in the name of sole proprietorships, partnerships or unincorporated 

trusts. 

In the case of approved Provident Funds, Trust Funds and approved contributory Pension 

Schemes, the applications should be in the name of the Trustee/Board of Management in 

order to facilitate the opening of the CDS accounts. 

3.3 How to Apply 

a) Applications should be made on the Applications Forms, issued with the Prospectus. (Exact 

size photocopies of the Application Forms too would be accepted.) Care must be taken to 

follow the instructions given in the Application Form. Applicants using photocopies are 

requested to inspect the Prospectus, which is available for inspection and also issued free of 

charge at the collection points listed in Annexure IV & V. 

Applications that do not strictly conform to such instructions and the other 

instructions set out below or which are illegible may be rejected. 

b) Applications should be made for a minimum of one hundred (100) Debentures (LKR 10,000). 

Applications exceeding 100 Debentures should be in multiples of 100 Debentures (LKR 

10,000). Applications for less than 100 Debentures or for a number, which is not in multiples 

of 100 Debentures, will be rejected. 

c) Only one type of Debentures should be applied per Application form. Investors may apply for 

Different types of Debentures on separate application forms using exact size photocopies. If 

several applications are received under one type of Debenture from single customer that 

would be considered as multiple application. The Bank/ Managers to the issue reserve the 

right to decide on and reject multiple applications at their discretion 


d) If the ownership of the Debentures is desired in the name of one individual, full detail should 

be given under the heading SOLE/FIRST APPLICANT in the application form, in the case of 

joint applicants, the signatures and particulars in respect of all applicants must be given under 

the relevant headings. 

e) Applications by Companies, Corporate bodies, Societies, approved Provident Funds, Trust 

Funds and approved Contributory Pension Schemes registered/incorporated/established in 

Sri Lanka should be made under their common seal or in any other manner as provided by 

their Articles of Association or such other constitutional documents of such applicant or as per 

the statutes governing them. In the case of approved Provident Funds, Trust Funds and 

approved Contributory Pension Schemes, the applications should be in the name of the 

Trustee/Board of Management in order to facilitate the opening of the CDS accounts. 

f) Companies/Corporate entities should state the Company Registration Number in the 

application form. The CDS number will be accepted only if such entities are lodging their 

Debentures directly with the CDS. 

Individuals should state their National Identity Card (NIC) Number in the Debenture 

Application Form. Passport Number will be accepted only when the NIC Number is not 

available. Such applicants must lodge their Debentures directly with the Central Depository 

Systems (Private) Limited (CDS). 

g) Any application form, which does not state the NIC, Passport or Company Registration 

Number as the case may be, will be rejected. 

h) In the case of the applications made under Powers of Attorney (POA) a copy of such POA, 

certified by a Notary Public should be attached with the Application Form. Original POA 

should not be attached. 

i) Applicants who wish to apply through their Margin Trading Account should submit the 

application in the name of the “Margin Provider / Applicant’s Name” signed by the margin 

provider. If the applicant wants the Debentures uploaded to the CDS Margin Trading 

Account, the relevant CDS Account Number relating to the Margin Trading Account should be 

indicated in the space provided in the Application Form. A copy of the Margin Trading 

Agreement should be attached with the Application Form. 

Margin Providers can apply under their own name and such applications will not be 

considered as multiple applications. 

j) If the applicants wish to lodge the debentures allotted to them directly to their CDS Account, 

they should state their CDS Account Number in the space provided in the Application Form. 

In such a situation the Debentures allotted to them will be directly deposited in their CDS 

Account and a Debenture certificate will not be issued to such applicants. 

k) Application forms stating 3 rd party CDS Account Numbers, instead of their own CDS Account 

Numbers, except in the case of Margin Trading, will be rejected. 

l) It is suggested that the applicants should lodge the debentures allotted to them directly to 

their CDS Account if they want to be certain of trading their Debentures on the date trading 

commences. 

m) Application Forms properly filled in accordance with the instructions thereof together with the 

remittance for the full amount payable on application should be enclosed in an envelope 

10 


marked “BOC DEBENTURE ISSUE” on the top left hand corner in capital letters and 

dispatched by post or delivered by hand to the following address. 

Managers & Registrars to the Issue 

Investment Banking Division 

23 rd Floor 

Bank Of Ceylon 

No 4, Bank Of Ceylon Mawatha 


In the alternative Application forms may also be delivered by hand to the head office or to any 

branch of the Bank of Ceylon listed in Annexure IV or to any member firm or trading member 

of the CSE listed in Annexure V 

Applications sent by post or delivered to any places mentioned in Annexure IV and V should 

reach the office of the Managers and Registrars to the Issue at least by 4.30 p.m. on the third 

working day immediately upon the closure of the subscription list. Applications received after 

the said period will be rejected even though they have been delivered to any of the said 

places prior to the Closing date or carry a postmark dated prior to the closing date. 

Applications delivered by hand to the managers & registrars to the issue after the closure of 

the issue will also be rejected. 

3.4 Mode of Payment 

1. Payment should be made separately in respect of each application only by way of cheques, 

bank draft or bank guarantee, as the case may be. Each Application Form should be 

accompanied by no more than one cheque, bank draft or bank guarantee. Application with 

two or more cheques, bank drafts, or bank guarantees will be rejected. Application Forms 

accompanied by cash will not be accepted. 

2. Cheques or Bank Drafts should be drawn upon any commercial bank in Sri Lanka and 

crossed “Account Payee Only” and made payable to “BOC Debenture Issue Account ”. 

The bank guarantee should be in a manner acceptable to BOC and should be issued by a 

commercial bank in Sri Lanka and payable on demand to “BOC Debenture Issue Account” 

3. Payments for applications for values above and inclusive of Sri Lankan Rupees One Hundred 

Million (LKR 100,000,000) should be supported by a Bank Guarantee. Cheques and Bank 

Drafts will not be accepted for values above and inclusive of Sri Lankan Rupees One 

Hundred Million (LKR 100,000,000) Applicants are advised to ensure that sufficient funds are 

available in order to honour the bank guarantees, inclusive of charges when called upon to do 

so by the Managers/Registrars to the Issue. It is advisable that the applicants discuss with 

their respective bankers the matters with regard to the issuance of bank guarantees and all 

charges involved. All expenses inclusive of charges relating to Real Time Gross Settlements 

(RTGS) should be borne by the applicants. 

4. The amount payable should be calculated by multiplying the number of debentures applied for 

by the issue price of LKR 100 per debenture. If there is discrepancy in the amount payable 

and the amount specified in the cheque/bank draft or bank guarantee, the application will be 

rejected. 

5. In the event that cheques are not realised prior to the date of deciding the basis of allotment, 

the monies will be refunded and no allotment of Debentures will be made. Cheques must be 

honoured on first presentation for the application to be valid. 

6. All cheques/bank drafts received in respect of the applications will be banked immediately 

after the closure of the subscription list. 


3.5 Rejection of Applications 

1. Application Forms and the accompanying cheques/bank drafts or bank guarantees, which are 

illegible or incomplete in any way and/or not in accordance with the terms, conditions and 

instructions, set out in this Prospectus will be rejected at the sole discretion of BOC. 

2. Applications from foreign citizens, non-residents and individuals under the age of 18 years, or 

in the names of sole proprietorships, partnerships of unincorporated trusts will also be 

rejected. 

3. Applications delivered by hand to the managers and registrars to the issue after the 

subscription list is closed will be rejected. Applications received by post after 4.30 p.m. on the 

third working day immediately following the date of closure of the subscription list, will also be 

rejected even if they carry a post mark dated prior to the closing date of the subscription list. 

Applications delivered to any places mentioned in Annexure IV & V should also reach the 

office of the Managers/Registrars to the Issue at least by 4.30 p.m. on the third working day 

immediately upon the closure of the Subscription List. Applications received after the said 

duration will be rejected even though they have been delivered to any of the said places prior 

to the closing date. 

3.6 Allotment of Debentures 

The basis of Allotment will be decided by the Board of Directors of BOC before the expiry of 

seven (07) market days from the closure of the Issue in the event of an over subscription. 

No preferential allotments will be made by BOC with regard to any specific individual or entity. 

The allotments will be made in a fair manner. 

The directors of BOC reserve the right to refuse any application or to accept any application in 

part only, without assigning any reason therefore. 

3.7 Unsuccessful Application 

BOC shall refund payment due on applications fully or partly unallotted within Ten (10) market 

days excluding the date of closure of the issue. Applicants shall be entitled to receive interest 

at the rate of last quoted average weighted prime lending rate (AWPLR) plus 5% for the 

delayed period on any refunds not made within this period. 

3.8 Refunds, Debenture Certificates and Direct Lodgements 

1. Where an application is not accepted, subsequent to the cheque being realised the applicant’s 

money in full or where an application is accepted only in part, the balance of the applicant’s 

money will be refunded. If the applicant has provided accurate and complete details of his 

bank account in the application, the bank shall make such refund payments to the bank 

account specified by the applicant, through Sri Lanka Inter bank payment system (SLIPS) and 

payment advice will be sent. If the applicant has not provided accurate and correct details of 

his bank account in the application, the bank shall make such refund payment to the applicant 

by way of a cheque and sent by post at the risk of the applicants. In the case of joint 

applications, the cheques will be drawn in favour of the applicant’s name appearing first on 

the application form. Refund cheques on Debentures, which have not been allotted, will be 

posted before the expiry of Ten (10) market days excluding the date of closure of the 

subscription list. Applicants would be entitled to receive interest at the rate of last quoted 

12 


average weighted prime lending rate (AWPLR) plus 5% for the delayed period on any refunds 

not made within this period. 

2. Debenture certificates will be dispatched before the expiry of twenty five (25) market days, 

from the date of closure of the subscription list by registered post to the address provided by 

each debenture holder in their respective applications. Joint Applicants shall be entitled to 

only one Debenture Certificate for the debentures held jointly, which shall be dispatched to 

the joint holder whose name appears first in the Register of the Debenture holders and BOC 

shall not be bound to register more than Three (03) persons (including the Principal Holder) 

as joint holders of any Debentures. 

3 Where requested by a debenture holder, the Debentures allotted will be directly uploaded to 

the respective CDS accounts given in the application before the expiry of eighteen (18) 

market days, from the date of closure of the subscription list. A written confirmation of the 

allocation will be sent to the applicant within two market days of crediting the CDS account, by 

ordinary post to the address provided by each applicant in his or her respective applications. 

Debenture Certificates will not be issued to such applicants. 

4. The BOC will submit to the CSE a ‘Declaration’ on the market day immediately following the 

day on which the investor’s CDS accounts are credited with the securities. 

In terms of the CSE listing rules the Debentures may be listed upon the completion of 

the CDS direct uploads and prior to dispatch of Debenture certificates. Therefore 

investors who wish to trade the Debentures in the secondary market from the first day 

of the commencement of trading are advised to request for a direct upload of the 

Debentures to their CDS accounts by stating their CDS account number when applying 

for the debentures. In the event that the CDS number is not stated in the application 

form the Debenture certificates dispatched by post may not be received by the 

investors before the Debenture commence trading on the CSE. 


4. OVERVIEW OF THE BANK 

4.1 Historical Overview 

14 

Bank of Ceylon (BOC) is the first state owned commercial bank in Sri Lanka established on 1 

August 1939 by a special statute, namely the Bank of Ceylon Ordinance No 53 of 1938. Now 

a diversified financial services organization, its business is to provide a broad range of 

banking and financial services to consumers, corporate customers and the Government of Sri 

Lanka. Today it banks circa 7 million customer accounts across all 9 provinces via 305 full 

service branches in Sri Lanka and 3 overseas locations. Its branch in the City of London is 

one of the oldest, the respective banking license dating back to 1949. BOC is subject to 

monitoring and supervision by the Central Bank of Sri Lanka and is rated AA (lka) coupled to 

a Stable Outlook by Fitch ratings Lanka Ltd. Its Board of Directors reflecting state ownership 

comprises Government nominees who are professionals from a variety of disciplines and 

experiences and includes representation from the Ministry of Finance. As at year-end 2008, 

BOC employed 7,912 full time permanent and 1,016 contractual, outsourced and casual 

employees in Sri Lanka and in its overseas branches. As per the plan we expect to recruit 

200 management trainee and 1000 trainees staff assistants during the year 2010. BOC is the 

market leader or holds significant market shares in Loans & Advances, Deposits, NRFC 

Accounts, Inward foreign exchange remittances, Off shore banking, Treasury products and 

Micro-banking. 

The bank is managed along the following segments and product lines – 

Consumer Group – Consumer Lending & Finance (Real Estate/Mortgages, Student Loans, 

Auto Loans); Retail Distribution & Banking (Branches); Commercial Business (SMEs & Middle 

Market Commercial Banking); Micro finance; Development Banking, Leasing. 

Corporate Banking Group - Debt based products (Term Loans, Overdrafts, Project Finance, 

Leasing, etc) and Transaction Services (Cash Management, Trade Services, Agency 

Services) for SMEs and Corporates. 

Treasury Operations – Foreign Exchange, Money Market, Local & Foreign Currency Funding, 

Fixed Income & Equity Trading; Correspondent Banking. 

BOC also has nine Subsidiaries and six Associate Companies in the areas of property 

development, merchant banking, leasing & finance companies, hotels, travel, unit trust and 

stock brokering. 

Vision of the Bank 

“Bankers to the Nation” 

Mission 

Customers: 

“Foster mutually rewarding relationships with all our customers, exceeding their expectations”. 

Staff: 

“Give all our staff, the recognition and rewards to be the best team of achievers in service 

excellence”. 

Owners: 

“ Be a profitable catalyst for equitable development covering urban and rural areas “. 

Society: 

“Provide world-class banking services across the nation as a beacon for progress and 

growth”. 

Indicating its dominance of the Sri Lankan economy, BOC has the largest asset base 

approximating LKR 484 Billion (y/e 2008), which represented approximately 25% of the total 

assets held by the commercial banks in the country. The capital base of the Bank as at 31 


December 2008 was LKR 31 billion enabling the highest single borrower exposure up to LKR 

8 billion. These are key aspects to note about the Bank. Among other significant features are 

that by 31 December 2009, BOC held 20.30% market share of domestic deposits, 19.23% of 

advances and 31.33% of foreign currency accounts. 

It is also important to note its expanding customer base of the Bank, numbering over 7 million 

bank accounts and the largest online network of over 500 service points. There are 337 ATM 

machines of BOC and 1600 ATM outlets in collaboration with other banks. The Bank 

continues to maintain its leadership position in the area of foreign currency remittances 

having a market share of over 55% in the year 2009.To facilitate customers, a web based 

electronic fund transfer system named “ BOC E-cash” was introduced. The Bank also 

introduced “X Press Money”, a network of speedier, low cost money transfer facility in Middle 

East. 

Bank’s procedures and protocols are driven through good corporate governance and 

transparency by complying with all regulatory requirements and best practices in the industry. 

It is committed to follow good corporate citizenship by actively involving in Corporate Social 

Responsibility activities by providing specific budgetary allocation for vital and justifiable social 

welfare projects and utilizing such expenses for the intended purpose. 

Since the early days of the 1940’s, the Bank has played a dominant and robust role in 

national development and continues to do so encompassing the entire country. Such 

development work is not only reflected in a branch network that criss-crosses the whole 

country, but also connect major sectors of the economy to provide life changing banking 

services. Such services take various forms – from direct lending to be it farmers, industrialists, 

large corporations or other government owned businesses or indirectly by placing the balance 

sheet of the bank at risk to facilitate trade across national and international borders. For the 

most part such services are priced on commercial terms taking into consideration costs and 

expenses normally incurred in the course of engaging in such activities. On a continuous 

basis, however, the Bank also undertakes activities that are not so commercially priced but 

provided at lower rates in order to develop selected areas of the country, its people and their 

businesses. The returns from such activities, at times distant and remote are not at all 

intangible. The history of the bank is full of examples where such development activity has 

generated beneficial results. 

Other salient features of BOC are 

It is the highest ranked Sri Lankan bank in the Bankers Almanac. 

All previous international debt-raising activities duly settled. 

Date Amount Tenor Outstanding 

2000-Oct USD 100 Mn 1 Year Nil 

2001-July USD 105 Mn 1 Year Nil 

2001-Oct USD 80 Mn 1 Year Nil 

2005-Sep USD 130 Mn 2 Years Nil 

2007-May USD 210 Mn 2 Years Nil 




16 

Stable deposit enabling solid balance sheet financing 

Savings 

41% 

Year 2008 

Other 

1% 

Demand 

15% 

Time 

43% 

Savings 

40% 

Year 2009 

Other 

0% 

Demand 

13% 

Above 88% Loan to Deposit ratio indicating efficient fund mobilization. 

Time 

47% 

Maintaining Tier I and Tier II capital adequacy requirements above the regulatory 

minimums. 

Being rated AA (lka) coupled to a stable outlook by Fitch Rating since 2004. 


Significant milestones in the life of the Bank 

1939 Established as the nation’s first modern, locally owned bank. 

1941 Operations commenced in Kandy with opening of a branch office 

1949 First overseas branch opened in London shortly after Independence 

1959 Authorized capital enhanced to LKR 50 Million by Act of Parliament. 

1961 The Government of Ceylon became sole owner by nationalizing the bank. 

1979 Offshore banking operations commenced 

with the establishment of the 

Foreign Currency Banking Unit 

1980 Automation of business operations 

1981 Branch opened in Male, Republic of Maldives 

1985 Head Office shifted to 32 storeys BOC Tower in Colombo. 

1988 Installation of the first BOC ATMs ushers in the electronic banking era 

1989 Introduction 

International 

of Ceybank Visa credit card in collaboration with Visa 

1998 MOU with Government of Sri Lanka 

autonomy and target oriented performance 

providing greater management 

2000 Authorized capital enhanced to LKR 50 Billion by Act of Parliament. 

2005 Balance sheet footings 

surpass LKR 300 billion, the largest asset base of any 

Sri Lankan bank. 

2005 Wide range of relief, rehabilitation and reconstruction activities 

undertaken 

and financed in the aftermath of the December 2004 tsunami. 

2006 IBM/FISERV prize for the fastest 

deployment of an online core banking 

system in Asia – Pacific region. 

2007 

2008 

Raise $ 210 million, the largest internationally syndicated debt by any Sri 

Lankan issuer; appointed Co-Manager of historic $ 500 million debut bond 

issued by the Government of Sri Lanka; commenced Village 

development 

Programme focused on engaging rural communities. 

Achieves largest online bank status in Sri Lanka with 303branches, 117 

extension offices and 253 ATM facilities; extends on line banking in the 

Maldives enabling expatriate customers to access their accounts, raises Rs 

4.2 billion via a listed subordinated rupee debenture of 5 years raises US $ 

21.6 million via a private placement of a 5 year subordinated dollar 

debenture. 

2009 Establishment of the Investment Banking 

Division, Integrated Risk Management 

Division and Trade Services Division 

B O C DEBENTURE PROSPECTUS 

17

LKR Mn 

LKR Mn 

1.5 

0.5 

18 

1 

0 

70,000 

60,000 

50,000 

40,000 

30,000 

20,000 

10,000 

0 

600,000 

500,000 

400,000 

300,000 

200,000 

100,000 

30,000 

25,000 

20,000 

15,000 

10,000 

5,000 

0 

Gross Income 

2005 2006 2007 2008 

Return on Average Assets (%) 

2005 2006 2007 2008 2009 

0 

Capital Funds 

PERFORMANCE SNAPSHOT 

2009 

Total Assets Total Deposits 

2005 2006 2007 2008 2009 

2005 2006 2007 2008 2009 

LKR Mn 

40.00% 

30.00% 

20.00% 

10.00% 

0.00% 

4,000 

3,000 

2,000 

1,000 

20.00 

15.00 

10.00 

5.00 

0.00 

0 

30.00 

25.00 

20.00 

15.00 

10.00 

5.00 

0.00 

B O C DEBENTURE 

PROSPECTUS 

Profit After Tax (PAT) 

2005 2006 2007 2008 2009 

Income Growth (%) 

2005 2006 2007 2008 2009 

Liquidity Ratio (%) 

2005 2006 2007 2008 2009 

Capital Adequacy Ratio (%) 

2005 2006 2007 2008 2009

4.2 Principal activities 

The Bank provides a comprehensive range of services covering all sectors of the business 

community as well as the Government. Listed below are the products and services provided. 

Corporate & Offshore Banking Retail Banking Personal Banking 

* Advances * Savings accounts * Current accounts 

* Trade Finance facilities * Current accounts * Local currency savings 

* Deposits * Loans & Advances * Foreign currency deposits 

* Fund Transfers * Trade Finance * Term deposits 

* Bonds & Guarantees * Credit/Debit cards 

* Other services * Safe Custody Vault 

International & Treasury Operations Development Banking 

* International Banking * Micro Farming 

* Correspondent Relationship * Micro Enterprises 

* Trade Promotions * Fisheries 

* Pay Office & Travel * Agri Business 

* Inward Remittance * Housing 

* Treasury * Transportation 

* Transactions in Government securities * Small & Medium Enterprises 

* Forex * Consumption 

* Fund management Advice * Education 

4.3 Goals for 2010 and beyond 

Outlook 

During 2010-2012, Sri Lanka would bank on local peace dividends and the global economic 

recovery. In the immediate to medium term, the tourism, agriculture and fisheries sectors are 

expected to expedite growth with the opening up of approximately 2/3 of the country’s coastal belt 

and almost ¼ increase in the landmass for economic activity previously unutilised due to the war. 

In the medium term, reconstruction of damaged infrastructure in the north and the east and 

expedited infrastructure investments in the rest of the country will provide impetus for growth. 

Country’s literate, trainable labour force and the liberalized Information Technology (IT) 

environment would also encourage new ventures in communication and information technology. 

Improved business confidence should continue to promote both local and foreign investments in its 

path to become the Wonder of Asia in line with the government’s vision. 

Committed to the Development of the North & the East 

As has already been reported, the war left two thirds of Sri Lanka’s coastal belt in the north and the 

East under-developed and largely untapped in potential and resources. 

The BOC is of the view that future growth in this context will significantly be domestic –based and 

the Northern and the Eastern Provinces will be at the centre of development, especially in the areas 

of tourism, agriculture, dairy, animal, husbandry and infrastructure development. 

In such a scenario and in our desire to support the Government’s mandate of bringing development 

to all areas of the country. We believe that BOC has a significant role to play in these endeavours, 

through a commitment to unearth and resuscitate dormant economic power in these regions. 


Objective -Transform BOC to Complete financial Solution House 

Future Strategies 

- Revenue Diversification 

- New Markets/ New Products 

- New skill set/skill migration 

- Business realignment 

Assumptions 

Risk 

- Sustainability of Domestic Peace 

- Our expectation that GDP will grow positively focusing on agriculture, fisheries, tourism, 

infrastructure and service industry 

- Political stability of the government and policy stability 

- Investor friendly Interest rate regime 

- Relatively stable rupee 

- Single digit inflation 

- Majority of the Banking sector growth is sourced from Domestic economy 

- Sustainability of low interest rate regime 

- Changes to the government policy Directions 

- Unexpected external shocks 

- Changes in Domestic inflation 

- Risk of political instability 

- Bank inability to Source/ retain/develop future skills 

- Systemic threat on asset quality 

- Natural Disasters 

- Bank inability to cope up with new market/ new product 

4.4 Share capital 

20 

a) The detailed breakdown of the share capital of BOC is given below. 

Authorized Capital LKR’000 

50,000,000 ordinary shares of LKR 1000 each 50,000,000 

Issued and fully paid 5,000,000 

The entire (100%) issued capital of BOC is held by the Secretary to the Treasury on behalf of the 

Government of Sri Lanka. 

b) Particulars of Loans, other Borrowings, Liabilities and indebtedness 

LKR ‘000 

(i) Long term borrowings as at 31 Dec 2009 

Debenture Issued 17,998,476 

Money Market Loan 17,162,000 

(ii) Short term Borrowings as at 31 Dec 2009 

Repo 34,203,701 

Call Money 10,820,000 


Leasing, Lease Purchase and Hire Purchase commitments 

• Operating Lease Commitments 

Future minimum lease payments under non-cancellable operating lease where the Bank is the 

lessee are amounting to LKR 482 Mn as at December 2009 

• Financial Lease Commitments 

The financial lease commitment as at 20 December 2009 is amounting to LKR 37 Mn. 

Guarantees and Other Material Contingent Liabilities as at 31 December 2009 

In the normal course of business, the Bank makes various commitments and incurs contingent 

liabilities with legal recourse to its customers. 

These commitments are quantified below. 

LKR ‘000 

Acceptance and documentary credit 174,571,889 

Bills For collection 3,114,649 

Guarantees 40,427,298 

Forward Exchange Contract 27,928,577 

Other Commitments 202,235 

246,244,648 

Mortgages and Charges on the Assets of BOC 

The following assets have been pledged by BOC as security as at 31 December 2009. 

Assets Value LKR ‘000 

Treasury Bills 9,698,000 

Treasury Bonds 62,931,000 

Index Linked Bonds 3,000,000 

c) Convertible Debt Securities 

The Bank does not have any convertible debt securities in issue. 

d) Other Debt Securities 

The following debt securities have been issued by BOC as at 20 th April 2010. 

Instrument Investor Amount Maturity date Rate of Interest 

LKR’000 

Unsecured Sri Lanka Insurance 250,000 31.12.2011 Floating interest rate: 

Subordinated Corporation Limited equivalent to 6 months 

Redeemable Weighted Average 

Debentures Treasury Bill rate plus 

1.5%p.a., payable semi 

annually. 

- do - National Savings Bank 1,000,000 03.11.2010 Floating interest rate 

equivalent to 1 year 

Weighted Average 

Treasury Bill rate plus 

0.7%p.a. payable semi 

annually. 

Present rate 11.68%. 


22 

- do - National Savings Bank 1,000,000 27.10.2011 Floating interest rate 

equivalent to 1 year 

Weighted Average 

Treasury Bill rate plus 

0.75% p.a. payable 

semi annually. 


- do - Employee Trust Fund 300,000 15.08.2013 Weighted Average 1 year 

Treasury Bill rate 

plus 1% p.a. 

2,550,000 Present rate 13.31%. 

Instrument Investor Amount Maturity date Rate of Interest 

LKR’000 

Unsecured BOC W/W & Op. Fund 1,200,000 17.11.2011 Weighted Average 1 year 

Redeemable Treasury Bill rate 

Debentures (before tax) 


- do - BOC Pension Trust 1,500,000 10.01.2012 Weighted Average 1 

Fund year Treasury Bill rate 

(before tax). 

Present rate10.39% 

- do - BOC Pension Trust 1, 000,000 12.03.2012 Weighted Average 1 

Fund year Treasury Bill 

Rate (Before Tax) 

Present rate 10.52% 



rate (before tax). 


- do - BOC Provident Fund 1,500,000 01.11.2012 Weighted Average 1 

year Treasury Bill 

rate (before tax) plus 

0.5% 


- do - BOC W/W & Op. Fund 500,000 01.11.2012 Weighted Average 1 



0.5% 


- do - BOC Provident Fund 500,000 01.04.2013 Weighted Average 1 



0.5% 




---------- rate (before tax) plus 

8,700,000 0.5%. 

====== = Present rate 11.02% 


As at date the following debt security is sold privately by BOC in conjunction with this Debenture 

Issue. 

Instrument Amount Rate of Interest 

Thirty Thousand (30,000) USD 21.615 Type “ A “ 

Unsecured Redeemable Million Floating interest rate equivalent to the 

Subordinated Five year six (06) month London Inter Bank Offered 

Debentures of USD one Rate (LIBOR) plus three per centum (3%) 

thousand (USD 1000) each p.a. re-set bi-annually. 

Rupee Debentures issued by BOC 

Type “ B “ 

Fixed Interest rate of five decimal five per 

Centum (5.5%) p.a. 

Instrument No of Amount Rate of Interest 

Customers 

Unsecured Subordinated 516 345,190,000 Fixed rate of Nineteen per cent 

Redeemable Five (05) year (19%) per annum on the Principal 

Debentures of LKR 100 each sum payable annually at the 

Expiry of every One (01) year 

Period from the date of allotment 

Of the debenture 

Unsecured Subordinated 87 3,699,390,000 Floating rate equivalent to 

Redeemable Five (05) year Seventy-Five basis points 

Debentures of LKR 100 each (0.75%) above the Weighted 

Average Six (06) Months 

Treasury Bill interest rate 

(Before tax) 

Unsecured Subordinated 407 227,790,000 Redeemable at LKR 225 for each 

Redeemable Five (05) Year bearing 17.61% p.a. yield to 

Zero Coupon Debentures maturity on the face value. 

------------------ 

4,272,370,000 

=========== 


4.5 Patents, Brands & Trade Marks 

BOC has not registered any patents as at date. 

The trademark “BOC “ is registered with the Registry of Patents, Brands & Trade Marks. 

As at date BOC owns the following Brands 

4.6 Degree of dependence on Key Customers 

BOC adheres to prudential requirements set out by the Central Bank of Sri Lanka, by virtue of 

which exposure to any one group of companies, any one company, and any individual borrower is 

regularly monitored. As such BOC is not overly dependent on any customer or any one sector for 

income at any given time. BOC is also not significantly dependent on any single supplier for its 

requirements 

4.7 Research and Development 

24 

BOC has spent a sum of LKR 11.48 million on research and development activities over the last 

three years. 


4.8 Subsidiaries and Associate Companies 

Name of the organisation Address % 

Held by BOC 

Merchant Bank of Sri Lanka PLC 

BOC Merchant Tower 

28 St Michael’s Road 

72.14 

Principal Activities 


Tel: 4711711/2565636 

Leasing, Trade Finance, Corporate Advisory 

Services, Fund Management, Capital market 

Activities and Corporate Secretarial Services. 

Fax: 2565666 

Merchant Credit of Sri Lanka Ltd 


Accepting fixed deposit and call deposits, finance 

and operating lease, hire purchase, trade finance 

and real estate business activities 

Property Development PLC 


Maintaining, managing and developing utility and 

value of the BOC Head Office Building 

Ceylease Financial Services Ltd 


Providing leasing, hire purchase and finance 

facilities 

BOC Travels (Pvt) Ltd 


Travel-related services 

BOC Property Development & Management 

(Pvt) Ltd 


Rent of office space at BOC Merchant Tower in 

Colombo 03 and Ceybank Home in Kandy 

Hotels Colombo (1963) Ltd 


Hotel services 

BOC Management & Support Services (Pvt) 

Ltd 


Management & Support Services 

11 th Floor 

BOC Merchant Tower 

28 St Michael’s Road 


Tel: 2301501 

Fax: 4710204 

19 th Floor 

BOC Head Office Bldg, 

No.04, Bank of Ceylon Maw 


Tel: 2448549/2544328 

Fax 2544329 

No.182, Platinum Tower 

Elvitigala Mawatha 


Tel: 2358000/2681850 

Fax. 4710359 

1 st Floor, 

BOC Super Grade Br Bldg 

Baseline Road 


Tele: 2688155-8 

Fax: 2688175 

19 th Floor 


No 04 Bank of Ceylon Mw 


Tele: 2388229 

02, York Street 


Tele: 2320391-3 

Fax: 2447640 

25 th Floor 


No. 04, Bank of Ceylon Mw 


Tele 2446790/811 

87.6* 

93.16 

55 

100 

100 

98.23 

100 


Ceybank Holiday Hones (Pvt) Ltd 


Management of BOC holiday homes. 

Lanka Securities (Pvt) Ltd 


Stock broker 

The Unit Trust management Co (Pvt) Ltd 


Fund Management 

Transnational Lanka Records Solutions 

(Pvt) Ltd 


Archive Management 

Mireka Capital Land (Pvt) Ltd 


Property Development 

Southern Development Financial Company 

Ltd 


Venture Capital Funding 

12 th Floor 


No. 04, Bank of Ceylon Mw 


Tele: 2447845 

Fax 2447845 

5 th Floor 

No.86, Galle Road 


Tele: 4706757 

Fax 5565633 

3 rd Floor 

BOC Building 

York Street 


Tele: 2327857 

Fax: 2448404 

160/16, Kirimandala Mw 

Narahenpita 


Tel: 2369001-4 

Fax: 4514588 

324 Havelock City 


Tele: 5533100 

Fax: 2502248 

18, Bandarawatta 

Pamurana 

Matara 

Tele: 041-2221618 

* The % holding in subsidiaries and associates including indirect holdings. 

26 


100* 

42.04* 

43.3 

24.69 

40 

41.67

4.9 Employees 

The permanent staff strength of BOC as at 28 th February 2010 was 7,396 employees. 

Category of Staff No of Employees 

Senior Management 57 

Middle Management 1,177 

Executives 2,981 

Non-Executives 3,181 

TOTAL 7,396 

The following tabulates the employees of the Trade Unions of the Bank as at 28 th February 2010 

Name of the Trade Union No of Employees 

Ceylon Bank Employees’ Union (CBEU) 5,992 

BOC Staff Officers’ Association 555 

All Ceylon Bank Employees’ Union 261 

Jathika Sevaka Sangamaya (JSS) 234 

4.10 Take Over Offers 

There were no offers for acquisitions or mergers by third parties in respect of the BOC shares 

during the past two years. BOC has also not made any similar Offers for the shares of third parties 

during the past two years. 

4.11 Tax Concessions 

No special tax concessions are available to BOC as at date. 

4.12 Dividend policy of the bank 

- Government of Sri Lanka is the sole shareholder of the bank. Dividend ratio will be decided based 

on the profitability of the bank on mutual consent. 

4.13 Financial Ratio (2009) 

(i) Interest coverage ratio = 1.35 

(ii) Net Debt/ Earnings before interest, tax, Depreciation, amortisation = 5.04 


5. THE BOARD OF DIRECTORS 

5.1 The details of the Board of Directors of BOC are as follows: 

Name & Qualifications Business Experience Address Age 

Dr Gamini Wickramasinghe Appointed to the Board of the No 410/89, 

60 

(Chairman) 

Bank of Ceylon as the Bauddaloka 

Chairman in may 2007 Mawatha, 

Colombo 07. 

Doctorate in Business 

Administration (DBA) from 

Manchester Metropolitan 

University, UK 

Masters Degree in Systems 

Analysis from the University of 

Aston, Birmingham, UK 

Fellow of the Chartered 

Management Institute (FCMI) 

UK. 

Fellow of the British Computer 

Society (FBCS) 

Dr R H S Samaratunga 

(Ex-Officio Director) 

Doctorate in Economics La 

Trobe University Melbourne 

MSc – University Wisconsin, 

Madison, USA 

MBA – University of Sri 

Jayawardenapura 

BA (Hon) in Economics 

Managing Director of the 

informatics Group of 

Companies, one of the largest 

software development houses 

in the country. He also holds 

directorships in Property 

Development PLC, BOC 

Travels (Pvt) Ltd, Ceybank 

Holiday Homes (Pvt) Ltd and 

Mireka Capital Land (Pvt) Ltd. 

Appointed to the Board of 

Bank of Ceylon in October 

2008 

Deputy Secretary to the 

Treasury with over 25 years 

experience in public service in 

several capacities. Previously 

held senior positions in the 

Ministry of Finance and 

Planning. Among them were 

Director, Department of 

National Planning, Additional 

Director General, Department 

of Fiscal Policy and Economic 

Affairs and Director General, 

Department of Trade, Tariff 

and Investment Policy. He is 

on the Boards of several public 

Enterprises and Government- 

linked companies such as 

Mihin Lanka (Pvt) Ltd, Ceylon 

Electricity Board 

28 B O C DEBENTURE PROSPECTUS 

9/49, Saman Mw, 

Galawila Watta, 

Homagama. 

53

Mr Chaminda Kumara Kularatne 

(Director) 

Bachelor of Law Degree 

(LLB) 

Attorney –at-Law 

Mr Gunarathna Gallage 

(Director) 

Bachelor’s Degree in Arts from 

Vidyodaya-Sri Jayawardenapura 

University of Sri Lanka and Post 

Graduate Diploma in Education 

Attorney -at -Law by profession 

counting over 20 years practice 

in the Civil Courts and title work. 

Mr Raju Sivaraman 

(Director) 

Chartered Architect 

Master Degree in Architecture 

(MSc-Arch) 

Fellow Member of the Sri Lanka 

Institute of Architects 

Dr Buddhadasa Kaluarachchi 

(Director) 

MBBS Degree from the 

University of Ceylon, Faculty of 

Medicine, Colombo 

First appointed to the Board of 

Bank of Ceylon in December 

2005 and was re-appointed in 

June 2007 

Asst. Secretary to the 

President and Co-ordinating 

Secretary to the Ministry of 

Finance and Planning. He is 

on the Boards of Hotels 

Colombo (1963) Ltd and MBSL 

Insurance Company Ltd. 


Bank of Ceylon in January 


June 2007 

Served as a member of the 

Compensation Tribunal at 

Peoples Bank and as a 

member of the Rent Board of 

Review for two consecutive 

terms 




June 2007 

He is the Associate Consultant 

of Plan 3 Architects in India, 

Managing Director of Arch- - 

Traid Consultants (Pvt) Ltd, an 

architectural consultancy firm 

since 1980, Director of Ram 

Developers (Pvt) Ltd and 

Ceylease Financial Services 

Ltd 




June 2007 

President of Ceylon Association 

for the Prevention of 

Tuberculosis (CNAPT) & 

Ruhunu Cultural Institution and 

also a member on the Board of 

the Management of Colombo 

Young Men’s Buddhist 

Association. Chairman of 

Hotels Colombo Ltd and 

Director of Lanka Hospitals 

Corporation Plc and Merchant 

Credit of Sri Lanka Ltd 


No. 14/7, Saman 

Uyana, 

Dambahena Road, 

Maharagama. 

No. 80/5, 

Lakshapathiya Road, 

Moratuwa. 

No.9 A, 

Amarasekara 

Mawatha, 

Colombo 05. 

No. 15/24, 3 rd Lane, 

Koswatte Road 

Nawala. 

34 

62 

61 

72 

29

30 

No Director of BOC or a person nominated to become a director is or was: 

a) Involved in a petition under any bankruptcy laws filed against such person or any partnership in 

which he was a partner or any corporation of which he was an executive officer; 

b) Involved in a conviction for fraud, misappropriation or breach of trust or any other similar offence 

which the CSE consider as a disqualification; or 

c) The subject of any order, judgement or ruling of any court of competent jurisdiction temporarily 

enjoining him from acting as an investment advisor, dealer in securities, director or employee of a 

financial institution and engaging in any type of business practice or activity. 

5.2 Directors’ shareholding 

BOC is a 100% state owned commercial bank. Hence no directors are holding any shares of the 

Bank. 

5.3 Directors’ Interest 

The Directors of the BOC have no interest in any assets acquired, disposed or leased by the BOC 

during the past two years and do not propose to acquire, dispose or lease any assets during the 

two years succeeding the Debenture Issue. 

Directors’ interests in contracts with the Bank both direct and indirect are disclosed under Note 45 

of the Financial Statements on page 168 of this Prospectus. 

Arch-Triad Consultants (Private) Limited has been appointed in December 2006 as the Consultant 

Architect for construction of Branch Office and Managers’ quarters at Madurankuliya and Mr 

Sivaraman had declared his interest on the said company at the Board meeting of BOC when this 

decision was taken. 

5.4 Directors’ Remuneration 

The allowances/fees payable to the Board of Directors are made in terms of the provisions in the 

Public Enterprises Circular No PED 04 dated 01 January 2003 and PF/PE/21 dated 24 May 2002 

issued by the Department of Public Enterprises of the General Treasury. 

The aggregate emoluments paid to the Directors during the financial year ended 31 December 

2009 was LKR 1,707,000. Estimate for the year 2010 is Rs. 1,530,000. 


6. CORPORATE GOVERNANCE PRACTICES 

Both the Board of Directors and Corporate Management of Bank of Ceylon believe in and are 

committed to strong governance and have identified good corporate governance as the critical 

success factor of a sound control environment, which will ultimately improve operational efficiency 

and enhance the brand image. Both also view a sound system of governance as fundamental in 

attracting and maintaining public confidence in the institution especially because it is a 

Government-owned enterprise. The pivotal and dominant role the bank plays in the Sri Lanka 

economy carrying substantial influence and leadership over many matters of policy and practice are 

other reasons why both the Board and Corporate management consider good governance 

important and a guiding framework for the future. 

Good corporate governance, which embodies transparency, disclosure and accountability, is the 

primary responsibility of the Board of Directors. Corporate Management for their part carries no 

less responsibility and is the driving force in its practice. 

Conscious of the many roles of the Government in the life of the bank as Owner, Customer, 

Regulator and Auditor, the Board of the Bank established a Corporate Governance Committee in 

July 2007, thereby assuming the leadership role in shaping Good Governance within the Bank. Its 

purpose was developing and recommending a set of Corporate Governance Guidelines and 

assisting the Board in implementation. Accordingly a code was drafted with the intention of 

obtaining transparency and demonstrating commitment to good Corporate Governance, which in 

addition to being principle-based, elaborates on more specific Corporate Governance structures, 

processes, and practices. However with the coming into force of the directions issued by the 

Central Bank of Sri Lanka on Corporate Governance the Committee is primarily working on the 

implementation of these directions. Significant details of the nominations and Corporate 

Governance Committee are mentioned below. 

The statements below describe some of the structure, processes and procedures of governance at 

the bank. 

BOARD OF DIRECTORS 

Under the current legislation, as a wholly owned state banking corporation, the Minister in charge of 

the subject of Finance appoints the Board of Directors of the bank. One of them is a representative 

of the Ministry of Finance. The same Minister also selects one of the appointed Directors as the 

Chairman of the Board. Subject to reappointment, the Directors have tenures not exceeding a 

period of three years. The Board has adopted a Code of Ethics for them. 

Out of the six (6) Directors, five (5) Directors are Independent Directors, namely Dr Gamini 

Wickramasinghe, Mr Chaminda Kumara Kularatne, Mr Gunaratne Gallage, Mr Raju Sivaraman and 

Dr Buddhadasa Kaluaraachchi. 

Detailed individual profiles of each member of the Board including the Independent Directors are 

provided in Section 5.1 of this Prospectus. 

Among the responsibilities of the Board are the following: 

Formulation of policies and strategies and monitoring successful implementation thereof. 

Approval of the budget and the corporate plan. 

Overseeing the business and affairs of the Bank. 

Ensuing succession planning for the Senior Management. 

Approval of credit facilities beyond the delegated authority of the Credit committee. 

Decisions on major capital investments and expansions. 


Approval of annual and interim Financial Statements for publication. 

Appointment of members to Board of subsidiaries. 

Appointing staff based on the requirements of the Bank. 

Ensuring that staff is acquiring adequate skills and knowledge at all levels. 

Ensuring that adequate risk management and reporting systems are in place and are being 

maintained. 

Ensuring compliance with applicable laws, regulations and principles of Corporate Governance. 

In taking decisions, the Board obtains professional advice from external sources whenever the 

Board deems it necessary. When there are major changes in the Banking Industry, the Board is 

educated of them through seminars, presentations etc. An Attorney-at-Law functions as the 

Secretary to the Board to ensure compliance with Board procedures, relevant rules and regulations. 

Regular Board Meetings were held monthly during the year 2007 while special Board Meetings 

were convened as and when required. Presently two meetings are held per month. Sixteen Board 

Meetings were held during the year under review. The average attendance of individual Directors at 

Board Meetings was in the region of 86%. 

The Board of Directors has established several Sub-Committees to fulfil its functions as follows: 

Audit Committee 

The committee should consist of at least three non-executive Directors of the Board, with two 

Members forming the quorum. 

ROLE AND RESPONSIBILITIES 

1. Internal Control 

i. Evaluate whether management is setting an appropriate “Control culture” by communicating the 

importance of internal controls (policies and procedures) and ensuring that all employees have an 

understanding of their roles and responsibilities. 

ii Review the Internal Audit function and approving & reviewing the progress of the Annual Plan and 

the work programmes, including the competence of the staff. 

iii Review and evaluate the Internal Control System covering accounting, financial and operational 

aspects based on Audit Reports. 

iv Monitor the annual review of the bank’s Business Continuity Plans and measures on safeguard of 

assets, in order to ensure the uninterrupted processing of financial information. 

v. Interact with external auditors to maximize the value for money. 

2 Financial Reporting 

32 

i. Review the annual/quarterly financial statements to ensure whether they are complete, consistent 

and comply with Accounting Standards, Regulations and Generally Accepted Accounting principles. 

ii Meet with Management and the external auditors to review the financial statements and the results 

of the audit. 

iii Review the annual report (Financial/non financial) before its release and consider whether the 

information is understandable and consistent. 

iv Assess the fairness of the quarterly financial statements and disclosures and obtain explanations 

from management and Internal Auditors on significant issues. 


In reviewing the bank’s annual report, financial statements and quarterly reports before submission 

to the board, the committee shall focus particularly on: 

• major judgemental areas; 

• any changes in accounting policies and practices; 

• significant adjustments arising from the audit; 

• the going concern assumption; and 

• compliance with relevant accounting standards and other legal requirements 

3. Internal Audit 

i. Review the adequacy of the scope, functions and resources of the internal audit department, and 

satisfy that the department has the necessary authority to carry out its work; 

ii Ensure that the internal audit function is independent of the activities it audits and that it is 

performed with impartiality, proficiency and due professional care. 

iii Review the internal audit programme and results of the internal audit process and, where 

necessary, ensure that appropriate actions are taken on the recommendations of the internal audit 

department. 

iv Review any appraisal or assessment of the performance of the head and senior staff members of 

the internal audit department. 

v Recommend any appointment or termination of the head, senior staff members and outsourced 

service providers to the internal audit function. 

vi Ensure that the committee is appraised of resignations of senior staff members of the internal audit 

department including the internal auditor and any outsourced service providers, and to provide an 

opportunity to the resigning senior staff members and outsourced service providers to submit 

reasons for resigning. 

vii Reviewing the internal audit reports, external audit management letters and subsequent follow up 

audits, thereon. 

viii Meet separately with the Internal Auditor to discuss any matters that the committee or the Internal 

Auditor believes should be discussed privately. 

4. External Audit 

i. Meet separately with the Internal Auditor to discuss any matters that the committee or the external 

auditor believes should be discussed privately. 

ii Ensure that significant findings and recommendations made by the external auditors are received 

and discussed on a timely basis. 

iii Ensure that the management responds to recommendations by the external auditors in timely 

manner. 

5 Reporting Responsibilities 

i. Regularly update the Board about committee activities and make appropriate recommendations. 

ii Ensure the Board is aware of matters in a timely manner, which may significantly impact the 

financial condition or affairs of the business. 

6. Other responsibilities 

i. Perform other oversight functions as delegated and/or requested by the Board. 

ii If necessary, institute special investigations and, if appropriate, hire special counsellors/experts to 

assist. 


34 

iii Evaluate the committee’s own performance on a regular basis. 

iv Review the progress made on the issues raised by the Committee on Public Enterprises (COPE), 

Strategic Enterprise Management (SEMA), Central Bank of Sri Lanka (CBSL), Financial Intelligent 

Unit (FIU), Sri Lanka Accounting and auditing Standard Monitoring Board, (SLAASMB) Other 

regulatory authorities, donor agencies, rating agencies and any other stakeholder. 

Nomination and Corporate Governance Committee 

The main responsibilities of the Committee, include the following 

i. Evaluate, in consultation with the Chairman of the Board and CEO, the current role and functions of 

the Board and its committees to oversee successfully the business and affairs of the Bank in a 

manner consistent with the Central bank of Sri Lanka guidelines on corporate governance 

applicable to the Bank, and make recommendations to the Board for approval with respect thereto. 

ii Determine the methods and execution of the annual evaluations of the Board’s and each Board 

Committee’s effectiveness and support the annual performance evaluation process. 

iii Review periodically the directors’ code of ethics 

iv Review periodically the Bank’s code of ethics. 

v. Obtain confirmation from the management that the policy included in the code of ethics for the Bank 

are understood and implemented. 

vi Implement procedures to select /appoint CEO/GM and key management personnel. 

vii Set the criteria such as qualifications, experience and key attributes for eligibility to be considered 

for appointment or promotion to the post of CEO/GM and the key management positions. 

viii Ensure that the CEO/GM and key management personnel are fit and proper persons to hold office 

as specified in the criteria given in Direction 3 (3) of the Banking Act Direction No 11 of 2007 issued 

by the Central bank of Sri Lanka and as set out in the statutes. 

ix Consider and recommend from time to time, the requirements of additional/new expertise and 

succession arrangements for key management personnel. 

Human Resources and remuneration Committee 

The committee should consist of at least three non-executive Directors of the Board, with two 

Members forming the quorum. The Chief Executive Officer/General Manager will attend all the 

meetings except when matters relating to him are discussed. 

Principal Responsibilities and Duties 

i Determine the remuneration policy (salaries, allowances and other financial payments) relating to 

Directors, Chief executive Officer (CEO)/General Manager (GM) and key management personnel of 

the Bank. 

ii Set goals and targets for the Directors, CEO/(GM) and the key management personnel. 

iii Evaluate the performance of the CEO/(GM) and key management personnel against the set 

targets and goals periodically and determine the basis for revising remuneration, benefits and other 

payments of performance-based incentive. 

iv Review staff matters referred by the Board or any other staff matters 


Integrated Risk Management Committee 

The main responsibilities of the Committee, include the following: 

i. Review and approve policies, programs and management committee charters relating to Risk 

management and Compliance. 

ii. Assess all risks, ie, credit, market, liquidity, operational and strategic risks to the bank on a monthly 

basis through appropriate risk indicators and management information. In the case of subsidiary 

companies and associate companies, risk management shall be done, both on a bank basis and 

group basis. 

iii. Approve and adjust, subject to ratification by the Board, risk limits and policies that establish the 

appetite of the Bank for credit, market, liquidity and operational risks, which may be recommended 

by the Chief Risk Officer. 

iv. Review the adequacy and effectiveness of all Management Level Committees such as the Credit 

Committee, Personnel Policy Committee and the Asset and Liability Management Committee to 

address specific risks and to manage those risks within quantitative and qualitative risk limits as 

specified by the Committee. 

v Review Risk Management reports on the risk profile of the Bank, as well as emerging market and 

regulatory risks, and the actions undertaken to identify, measure, monitor and control risks. 

vi. Take prompt corrective action to mitigate the effects of specific risks in the case such risks are at 

levels beyond the prudent levels decided by the Committee on the basis of the bank’s policies and 

regulatory and supervisory requirements. 

vii. Meet at least quarterly to assess all aspects of Risk Management including updated Business 

Continuity Plans (BCP) 

viii. Take appropriate actions against the officers responsible for failure to identify specific risks and 

take prompt corrective actions as recommended by the Committee, and/or as directed by the 

Director of Bank Supervision. 

ix. Submit a risk assessment report within a week of each meeting to the Board seeking the Board’s 

views, concurrence and/or specific directions 

x. Review and consult with management regarding the adequacy and effectiveness of risk 

management staffing and risk identification, measurement, and monitoring processes, including 

without limitation compliance, credit risk evaluation and information security. 

xi. Review and concur, by majority vote, in the appointment, replacement, reassignment, or dismissal 

of the Chief Risk Officer. 

xii Establish a compliance function to assess the bank’s compliance with laws, regulations, and 

regulatory guidelines, internal controls and approved policies on all areas of business operations. 

xiii Ensure that the dedicated Compliance Officer selected from key management personnel, shall 

carry out the compliance function and report to the Committee periodically. 

CORPORATE MANAGEMENT 

Corporate Management consisting of the Chief Financial Officer and Deputy General Managers 

headed by the General Manager is responsible for executive decisions, administration and 

operation of the bank. In keeping with Board approved guidelines for promotion and recruitment, 

the Board appoints all members of the Corporate Management. 

The sub-committees established to fulfil functions delegated to Management are as follows: 


36 

Credit committee 

The overall objective of the Credit Committee is to formulate and set policy guidelines in order to 

maintain and develop a diversified credit portfolio that will achieve adequate returns in keeping with 

corporate objectives. The committee will approve credit applications within its delegated authority. 

The committee is responsible for establishing policy with regard to credit matters, it sets out, 

establishes, reviews and recommends improvements to credit policies and ensures that adequate 

processes and underwriting standards are in place. Authority to approve credit facilities has been 

delegated at branch; province and head office levels with the General Manager holding the highest 

approval limit. Facilities exceeding the limits referred to above are forwarded to the Credit 

Committee for approval. The final authority, however, remains with the Board of Directors. 

Asset and Liability Management Committee (ALCO) 

The key objective of ALCO is to ensure optimum utilisation of the available financial resources to 

maximise earnings while ensuring the adequacy of liquidity. It comprises the General Manager, 

Chief Financial Officer and Members of the Corporate Management representing the Business 

Divisions of the Bank. ALCO is responsible for the interest rate structure of all assets and liabilities 

and for the optimisation of net interest margin; it monitors liquidity and formulates the funding 

strategies. 

It is also responsible for the distribution and management of assets and liabilities in terms of 

volume, tenor and return. The impact of key market risk exposure variables are analysed and 

strategies formulated to optimise earnings. 

The committee reviews and recommends policies, limits and guidelines within which ALCO 

strategies are to be executed. It ensures that the key market risks and variables are thoroughly 

reviewed and evaluated when market risk exposure decisions are made and profitability is 

optimised within acceptable risk limits. Further, it reviews, recommends and approves large capital 

outlays and investments. 

Personnel Policy Committee (PPC) 

This committee is responsible for managing the human resources – the most valuable asset of the 

Bank. The Committee comprises the General Manager, four Deputy General Managers including 

Deputy General Manager (Human Resource Development) and Assistant General Manager 

(Personnel). 

The PPC decides the key personnel policies and processes in relation to human resources in 

keeping with strategic plans and ensures that a sufficient number of qualified and experienced staff 

are in the correct positions at all times. 

In addition to identifying knowledge and skill needs for development through training, it also 

ensures, that mechanism for recognising the performance and contribution of employees is in place 

so that all staff is evaluated regularly. The Committee is also responsible for reviewing the 

recommending the methods and levels of remuneration and compensation and for making available 

other benefits to support the staff in achieving corporate goals. It develops strategies for improving 

labour relations and reviews and recommends conditions and amendments for collective 

agreements. 

FINANCIAL TRANSACTION REPORTING 

The Bank has taken steps for preventing money laundering, and reporting suspicious financial 

transactions by the application of KYC (“Know Your Customer”) policies as required under the FIU 

regulations. In this respect, a Compliance Manager and a team has been appointed. In terms of 

the Financial Transactions Reporting Act No 6 of 2006, the Bank continues to furnish the data 

relating to all cash and electronic transactions other than inter-bank transactions exceeding LKR 

500,000 on a bi-weekly basis to the Financial Intelligence Unit within Central Bank of Sri Lanka. 


7. CORPORATE MANAGEMENT 

NAME DESIGNATION QUALIFICATION & EXPERIENCE 

B A C Fernando 

General Manager 

Ms W A Nalini Senior Deputy General 

Manager (Corporate & 

Offshore Banking) 

K Dharmasiri Deputy 


(Recovery) 

Mrs K Kulatunga Deputy 

General manager 

(Retail Banking) 

H M A B 

Weerasekara 

Deputy 


(International & 

Treasury) 

C Samarasinghe Deputy 


(Product & 

Development Banking) 

I D Weerasena Deputy 


(Sales and Channel 

Ms Deepa N 

Wanniarachchi 

Management) 

Deputy 


(Finance & Planning) 

W D F Wimalaratne Deputy 


(Human Resource 

Development) 

M K Nandasiri Deputy 


(Support Services) 

MBA, FIB, BA 

40 years of experience in banking. 

BPhil. (Econ.) AIB, FIB (Sri Lanka), BA (Econ.) 

Over 32 years of banking experience. 

BPhil. (Econ), Bcom (Hons) 

AIB (Sri Lanka) 

Over 32 years of banking experience 

BPhil, BA, FIB, AIB, Diploma in Bank 

Management, Diploma in Personnel 

Management. 


BPhil (Industrial management), BA Econ (Hons) 

Over 30 years of experience in national and 

international banking. 

BPhil (Econ), BA (Hons) 

30 years of banking experience 

BPhil (Econ). , BA (Econ) 


B.Com (Special), Post Graduate Diploma in 

Business & Finance Administration in ICASL in 

association with Cranfield University School of 

Management, UK. 


FIB, Diploma in Bank Management, P.G Diploma 

in Business and Finance Administration. 


BA (Hons) 

(1 st Class)(Econ),Bphil(Econ), 

AIB(Sri Lanka) 


M Kiritharan Chief Legal Officer Attorney-at-Law and Notary Public (SL), Solicitor 

(UK) Executive Diploma in Business 

Administration. 

Over 31 years of experience in legal affairs 

A Rupasinghe 

T Fernandopulle 

Chief Financial Officer FCA(Sri Lanka),B.Sc.(Business) 

(Sri Lanka), MBA in Finance University of 

southern Queensland, Australia 

Chief Risk Officer 

Over 23 years experience in finance. 

B.Sc (Hons)(London) M.Sc (London) F.C.I.B. 

(London) President of Charted Institute of 

Bankers (Sri Lanka) Over 30 years banking 

experience. 


Dr L Siriwardena Head of Research and 

Development 

R Peiris Head of Information 

Technology 

Dr W G Karunadasa Chief Internal auditor 

M.A, PhD, 

Over 20 years experience in banking sector 

macroeconomic research and analysis. 

MSc-IT(UK), CITP(UK), MBCS(UK), MPMI(UK), 

MCSSL, Over 27 years experience in fields of 

data processing and information Technology. 

CDBA (Oxford) DBA(EU), MBA,FCA,FSCMA, 

CMA (AUS) 

M F Gafoor Head of Marketing 30 years marketing experience with British 

American Tobacco Company and its subsidiaries. 

Former General Manager of Whittalls Insurance 

and DHL Colombo. 

The General Manager is not and was not: 

a) Involved in a petition under any bankruptcy laws filed against such person or any partnership in 

which he was a partner or any corporation of which he was an executive officer; 

b) Involved in a conviction for fraud, misappropriation or breach of trust or any other similar offence 

which the CSE consider as a disqualification; or 

c) The subject of any order, judgement or ruling of any court of competent jurisdiction temporarily 

enjoining him from acting as an investment advisor, dealer in securities, director or employee of a 

financial institution and engaging in any type of business practice or activity. 

Aggregate emoluments of the chief executive officer and the corporate management team including 

bonus/profit sharing for 2009 is Rs. 22.4 Mn and estimated at Rs. 22.8 Mn for 2010. 

38 


8. PROPERTIES 

Details of the Properties of the Bank (Freehold Properties and Leasehold Properties) are given in the 

Annexure VI 


9 STATUTORY AND OTHER GENERAL INFORMATION 

9.1 Inspection of Documents 

Extracts from the Bank of Ceylon Ordinance are set out in Annexure 1 and forms part of this 

Prospectus. This Prospectus will be available for inspection at the official website of BOC at 

www.boc.lk and the website of CSE (www.cse.lk) until the subscription list closes. 

The Bank of Ceylon Ordinance, the Auditors Report and all other documents referred to in this 

Prospectus can also be inspected at any time during the normal business hours at the Head Office 

of BOC from the date hereof, until the subscription list closes. 

9.2 Brokerage 

Brokerage at the rate of 25 cents per Debenture will be paid in respect of the number of Debentures 

allotted on applications bearing the stamp of any member and Trading member of the CSE, or any 

agent appointed by BOC. 

9.3 Trustee Fees 

The fee payable to the Trustees will be LKR 300,000 p.a. plus statutory levies. 

No conflict of interest with the Trustee 

9.4 Expenses of this Issue 

The total expenses of the issue including the cost of printing, advertising and promotional costs 

connected with the issue will be approximately LKR 25Mn and will be met from the funds of BOC. 

9.5 Underwriting 

The Debenture issue is not underwritten. In the event the issue is under subscribed, the subscribers 

shall be allotted in full and the quantum of the funds raised will be utilised for the purpose detailed 

in section 2.3 of this Prospectus. 

9.6 Material Contracts 

BOC has not entered into any material Contracts as at date other than the Contracts entered into in 

the Ordinary Course of Business. 

9.7 Litigation, Disputes and Contingent Liabilities 

40 

There are 106 actions filed against the Bank in its routine banking operations and these actions 

mainly relate to the following categories. 

a) Injunction 

b) Stay Orders 

c) Leave to Appeal. 

The Bank is of the view that, most of these actions have been successfully defended by the Bank 

and even if the Bank is unsuccessful in the few exceptions where the judgement could be against 

the Bank such result will not be of detriment to the financial stability of the Bank. 

Information relating to litigation, Disputes & Contingent Liabilities against the Bank is given in Note 

43 of the Financial Statements for the year ended 2009. 

There are no penalties imposed by any regulatory and/or state authority against the Bank as at 

date. 


Declaration by the Directors 

We the undersigned being the Directors of Bank of Ceylon, hereby declare and confirm that the 

Prospectus has been seen and approved by us and we collectively and individually accept full 

responsibility for the accuracy of the information given and confirm that, the provisions of the 

Colombo Stock Exchange listing rules have been complied with and after making all reasonable 

enquiries and to the best of our knowledge and belief, there are no other facts the omission of 

which would make any statement herein misleading or inaccurate. Where representations 

regarding the future performance of the entity have been given in the Prospectus, such 

representations have been made after due and careful inquiry of the information available to the 

entity and making assumptions that are considered to be reasonable at the present point in time 

and according to our best judgment. 

Dr. G. Wickramasinghe (Sgd) on 04 May 2010 

Dr. R.H.S. Samaratunga (Sgd) on 27 April 2010 

Mr. G.K.A.C.K. Kularatne (Sgd) on 04 May 2010 

Mr. G. Gallage (Sgd) on 04 May 2010 

Mr. R. Sivaraman (Sgd) on 04 May 2010 

Dr. B. Kaluarachchi (Sgd) on 04 May 2010 


Declaration by the Bank 

An application has been made to the Colombo Stock Exchange for permission to deal in and 

obtain a listing for the Debentures to be issued by the Bank pursuant to this Prospectus. Such 

permission will be granted when the Debentures are listed on the Main Board of the Debt System 

of the Colombo Stock Exchange. The Colombo Stock Exchange assumes no responsibility for 

the accuracy of the statements made or opinions expressed or reports included in this prospectus. 

Listing on the Colombo Stock Exchange is not to be taken as an indication of the merits of the 

Bank or of these Debentures. 

B.A.C.Fernando H.M.A.B. Weerasekera 

General Manager Deputy General Manager 

International & Treasury 

Declaration by the Managers to the Issue 

We, Investment Banking Division of Bank of Ceylon, 23 rd Floor, No:04, Bank of Ceylon Mawatha, 

Colombo 01 being the Managers, Sponsors and Registrars to this Debenture issue, hereby 

declare and confirm that to the best of our knowledge and belief the prospectus constitutes full 

and true disclosure of all material facts about the issue and the BOC. 

. 

Mr.H.M.A.B.Weerasekara Mr.S.M.S.C.Jayasuriya 

Deputy General Manager Assistant General Manager 

International and Treasury Investment Operations 

42 


EXTRACTS FROM THE BANK OF CEYLON ORDINANCE 

Annexure I 

Board of Directors 6. (1) The Management and administration of the affairs of the 

of the Bank Bank shall be vested in a Board, consisting of six directors 

appointed by the Minster, one of whom shall be a representative of 

the Ministry charged with the subject of Finance (hereinafter 

referred to as the “ex officio director ”) 

(2) The Board may exercise, discharge or perform the powers, 

functions or duties of the bank for the purpose of carrying on the 

business, and administering the affairs of the bank. 

(3) No act or proceeding of the Board shall be invalid by reason only 

of the existence of any vacancy among the Directors or any defect 

in the appointment of a Director or authorization by the ex officio 

director under subsection (8) 

(4) A Member of Parliament shall not be qualified to be a Director. 

(5) The Minister shall appoint one of the appointed Directors as the 

Chairman of the Board. 

(6) Every appointed Director shall hold office for a period of three 

years, unless he is earlier removed from office or vacates his 

office. 

(7) If any appointed Director is temporarily unable to discharge the 

duties of his office on account of ill health, or absence from Sri 

Lanka, or any other cause, the Minister may appoint some other 

person to act as a Director in his place. 

(8) If the ex officio Director is unable to attend any meeting of the 

Board, he may authorize any other officer to be present on his 

behalf at such meeting; and the officer so authorised shall be 

deemed for the purpose of such meeting to be a member of the 

Board. 

(9) An appointed Director may resign his office by letter addressed to 

the Minister. 

(10) The Minster may, if he thinks it expedient to do so, remove an 

appointed Director from office. 

(11) A Director who vacates office by resignation or effluxion of time 

shall be eligible for re-appointment. 

(12) The ex officio Director shall have all the same rights and privileges 

as the appointed Director. 

(13) The provisions of subsections (1), (2) and (3) shall be deemed to 

have come into operation on October 12, 1961. 

Disclosure of 11 A Director who or whose spouse or dependent child or a firm or 

Interest by a company in which such Director, his spouse or dependent child 

Director has a substantial interest is directly or indirectly interested in any business 

transacted or proposed to be transacted by the Bank shall disclose the 


nature of such interest at the meeting of the Board. where such business is 

discussed. The disclosure shall be recorded in the minutes of the Board 

and such Director shall not take part in any deliberation or decision of the 

Board with regard to that business and shall withdraw from such meeting 

whilst such deliberation is in progress or decision is being made. 

Business which 71 Subject to the provisions of this Ordinance the business which the bank is 

the Bank may transact authorized to carry on and transact shall be the several kinds of business 

specified in Part 1 of the First Schedule subject to the limitations mentioned 

in Part II thereof. 

. 

FIRST SCHEDULE 

PART I 

Business which 1 The Bank is authorized to carry on and transact the several kinds of 

the bank is business hereinafter specified, namely:- 

authorised to carry 

on and transact 

To carry on (a) To establish, carry on, develop and extend in Sri Lanka and 

business of elsewhere the business of banking in all its branches and 

banking departments and in particular and without prejudice to the 

generality of the foregoing to exercise, perform and do all or 

any of the following powers, acts and things subject nevertheless to the 

restrictions and conditions set out in Part II of this Schedule. 

To open accounts (b) (i) To open, maintain and manage current deposit, saving and other 

accounts; 

To discount bills (ii) To discount, buy, sell and deal in bills of exchange, promissory notes, 

hoondies, poorjas, coupons, drafts, bills of lading, warrants, debentures, 

certificates, scrip and other instruments and securities, whether 

transferable or negotiable or not: 

To issue letter of (iii) To grant and issue letters of credit and circular notes: 

credit 

To deal in bullion and (iv) To buy, sell and deal in bullion and specie and engage in 

specie operations in exchange. 

To negotiate loans (v) To negotiate loans and advances, to receive money securities 

and valuables on deposit, or for safe custody, or otherwise: 

To collect money (vi) To collect and transmit money and securities. 

To transact agency (c) To manage property and transact all kinds of agency business 

business commonly transacted by bankers. 

To borrow or raise (d) To borrow or raise money in such manner as the bank shall think fit 

money and to secure the repayment of any money borrowed, raised or 

owing by mortgage, charge or lien upon the whole or any part of the bank’s 

property or assets whether present or future including its uncalled capital 

and also by a similar mortgage, charge or lien to secure and guarantee the 

performance by the bank of any obligation or liability it may undertake. 

To lend and (e) To lend and advance money securities and property or give credit to 

advance money such persons, firms or companies and on such terms as may seem 

expedient and either with or without security and if with security upon such 

44 


security and with such conditions as may from time to time be deemed to 

be advisable. 

To buy and sell (f) To buy, sell, invest, underwrite, deal in and dispose of stocks, shares, 

stocks and shares debentures, mortgages, bonds, or securities issued or guaranteed by the 

Government of Sri Lanka or by the Government of any other country or by 

any company or corporation 

Provided, however, that the bank shall not enter into any transaction 

affecting the stocks, shares, debentures, mortgages, bonds or securities 

issued or guaranteed by any other country or by any such company or 

corporation except with the approval of not less than four Directors of the 

bank given after considering the written observations of the General 

Manager of the Bank, and with the written consent of the Minister. 

To acquire any 

other business (g) To acquire and undertake the whole or any part of the banking and 

discount business of any person or company carrying on business which 

the bank is authorized to carry on; 

Provided, however, that the power contained in this paragraph shall only 

be exercised with the approval of not less than four Directors of the Bank 

given after considering the written observations of the General Manager of 

the Bank, and with the written consent of the Minister. 

To acquire property (h) To purchase, take on lease or in exchange, hire or otherwise acquire, any 

immovable or movable property and any rights or privileges. 

To enter into (i) To enter into any arrangement for sharing profits, union of interest, 

arrangement for co-operation, joint ventures, reciprocal concession or otherwise with 

profit sharing any person or company carrying on or engaged in or about to carry on or 

engaged in any business or transaction. 

To act as trustees, (j) To undertake and execute any trusts the undertaking whereof may 

executors, etc. seem desirable, and also to undertake the office of executor, administrator, 

receiver, treasurer, or registrar, and to keep for any company, Government, 

authority, or body, any register relating to any stocks, funds, shares or 

securities, or to undertake any duties in relation to the registration of 

transfers, the issue of certificates, or otherwise. 

To provide for (k) To establish and support or aid in the establishment and support of 

employees associations, institutions, trusts, schemes for the providing of pensions and 

of guarantee and other funds, and conveniences calculated to benefit 

employees or ex-employees, of the bank or the dependants or connexions 

of such persons and to grant pensions and allowances, and to make 

payments towards insurance, and to subscribe or guarantee money for 

charitable or benevolent objects or for any exhibition or for any public, 

general, or useful object. 

To sell undertaking (l) To sell or dispose of the entire undertaking of the bank, or any part thereof, 

for such consideration as the bank may think fit, and in particular for 

shares, debentures or securities of any other bank or to amalgamate the 

bank’s business with that of any other bank. 

Provided, however, that the powers contained in this paragraph shall only 

be exercised with the approval of at least four directors of the bank given 

after considering the written observations of the General Manager of the 

Bank, and with the written consent of the Minister. 

To deal with the (m) To construct buildings on or improve or develop any land belonging 

property of the to or taken on lease or possessed or occupied by the bank and to 

bank manage, exchange, lease, mortgage, dispose of, sell, turn to account or 

otherwise deal with all or any part of the property and rights of the bank. 


To exercise it’s (n) To do all or any of the above things in any part of the world and as 

powers in any part principals, agents, contractors, trustees or otherwise and by or 

of the world through trustees, agents or otherwise and either alone or in conjunction 

with others. 

To support the (o) To take or concur in taking all such steps and proceedings as may 

credit of the bank seem best calculated to uphold and support the credit of the bank and to 

obtain and justify public confidence and to avert and minimize financial 

disturbances, which might affect the bank. 

To procure (p) To procure the bank to be registered or recognized in any foreign 

recognition of the country or place. 

bank 

To obtain (q) To give any guarantee or indemnity and to enter into any 

concessions arrangement with any Government or any local authority in order to obtain 

any rights, concessions and privileges. 

To do hire- (r ) To do hire-purchase business and receive discounts, commissions 

purchase business and other remuneration. 

To form (s) To form any company for carrying on any business, to acquire and 

companies undertake the business of, purchase any interest in, or acquire or hold 

shares or stock in, any company carrying on any business. 

To carry on any (t) To carry on such other trade or business or engage in such other 

trade or business activity, which can in the opinion of the bank be advantageously carried on 

or engaged in by the bank. 

General (u) To do all things incidental or conducive to the attainment of the 

above objects or the exercise of the above powers. 

Interpretation of 2. The objects set forth in any paragraph of clause 1 of this schedule 

objects shall not, except where the context expressly so requires, be in any wise 

limited or restricted by reference to or inference from the terms of any other 

paragraph or the objects therein specified, and the powers thereby 

conferred shall not be deemed merely subsidiary or auxiliary to the objects 

mentioned in the first paragraph of clause 1 of this Schedule but the bank 

shall, except when the context expressly requires otherwise, have full 

power to exercise all or any of the powers conferred by any part of clause 1 

of this schedule in any part of the world. 

PART II 

Restrictions and 3. The business of the bank shall be carried on subject to 

qualifications the following restrictions and qualifications: 

Loans, overdrafts, (a) No loan, overdraft, advance or other accommodation 

Advances, and shall be granted by the bank to any person unless 

other accommodation the Board is satisfied that he is worthy of credit up to 

to be granted only the amount of such advance, loan or other 

in certain accommodation or that such amount is secured by 

circumstances adequate security, or that the project or scheme to which such 

amount is to be applied is financially sound; 

46 

Provided that the bank may grant any loan, overdraft, advance or 

other accommodation to any Government department, corporation, 

statutory body, local authority, co-operative society, approved 

society or unincorporated body of persons which is unable to 

satisfy the board as to the requirement contained in the preceding 

provisions of this paragraph if the grant of such loan, overdraft, 

advance or other accommodation is approved by the Minister in 


consultation with the Minister in charge of the subject of Finance 

and if the Minister in charge of the subject of Finance guarantees 

under section 10 the repayment of such advance, loan or other 

accommodation. 

Loans to directors 

and companies (b) (i) Where prior to the date of his appointment as a director no sum 

has been granted by way of loan, overdraft, advance or other 

accommodation to such director or any company or firm in which 

he has a substantial interest, then, no loan, overdraft, advance, or 

other accommodation shall be granted to any such company or 

firm, but a sum not exceeding fifty thousand rupees in the 

aggregate may be granted to such director by way of loans, 

overdrafts, advances and other accommodation. 

(II) Where prior to the date of his appointment as a director any sum 

has been granted by way of loan, overdraft, advance or other 

accommodation to such director or any company or firm in which 

he has a substantial interest, then such director, company or firm 

may be granted by way of loans, overdrafts, advances or other 

accommodation a sum which does not exceed the aggregate of 

the sums granted to such director, company or firm prior to the 

date of such appointment, less any sum remaining unpaid. 

Provided that where any sum so granted to a director prior to his 

appointment as a director is a sum not exceeding fifty thousand 

rupees such director may be granted by way of loans, advances, 

overdrafts and other accommodation a sum not exceeding fifty 

thousand rupees in the aggregate, in addition to any sum 

remaining unpaid. 

(iii) No loan, overdraft, advance or other accommodation 

shall be granted to a director for the time being of the bank or a 

firm, or company in which he has a substantial interest unless 

security approved by the bank is given and the loan, overdraft, 

advance or other accommodation is sanctioned at a meeting of the 

board by not less than four other directors. 

Restriction on *(e) No advance, loan or accommodation shall be granted 

granting of loans to any General Manager, Assistant General Manager, or Branch 

Manager, or any officer, clerk, or servant of the bank exceeding the 

sum of five hundred rupees except against appropriate banking 

security; any loans exceeding five hundred rupees to such persons 

shall only be granted with the previous approval of the board. 

Guarantee by (f) No loan, overdraft, advance or other accommodation 

employees shall be granted by the bank on the guarantee of an employee of 

the bank other than to another employee of the bank. 

How may powers 4 All the powers contained in clauses 1 and 2 of this 

be construed schedule shall be read and construed subject to the restrictions 

and qualifications in clause 3 of this Schedule and in case of 

conflict or inconsistency the provisions of clause 3 of this Schedule 

shall prevail. 


SECOND SCHEDULE 

PART 1 

Proceedings of Directors 

Meetings of 

Directors 1. The Directors may meet together for the dispatch of 

business, adjourn and otherwise regulate their meetings as they 

think fit and may determine the quorum necessary for the 

transaction of business. Until otherwise fixed the quorum shall be 

three. 

Who may preside 

at meetings 2. The Board shall be presided over by the Chairman if 

present, or in his absence, by the deputy Chairman, if 

any, but if neither a Chairman nor a Deputy Chairman shall have 

been appointed, or if neither the Chairman nor the Deputy 

Chairman be present at the time fixed for holding the meeting of 

the Board, the directors present shall choose one of their number 

to preside. 

How questions at 3. Any questions which shall arise at any meeting of the 

Board meetings Board shall be decided by a majority of votes of those 

decided present, and in the case of an equality of votes the Director 

presiding at the meeting shall have a second or casting vote. 

Acts to be valid 4. All acts done by the Board or by a committee of 

notwithstanding Directors or by a person acting as Director, whether 

defects in solely or as a member of the Board or of a committee, 

appointments shall, notwithstanding that it be afterwards discovered that there 

was a defect in the appointment of the Board, Committee, or 

person acting as Director, or that such person was not qualified to 

be a Director, be as valid as if there had been no such defect and 

the person acting as Director had been duly qualified. 

Meetings of 5. The meetings and proceedings of any committee shall 

committees be governed by the provisions of this Schedule for regulating the 

meetings and proceedings of Directors, so far as the same are 

applicable thereto, and are not superseded by the express terms of 

the appointment of the committee. In any matter in which no 

provisions are made by the Board or by this Schedule a Committee 

may conduct its business in such manner as it thinks fit. 

Minutes of 6. (1) The Board shall cause minutes to be made in books 

proceedings of provided for the purpose of the following matters, 

Directors to be namely, 

kept. (a) All appointments of officers and committees made by the Board; 

(b) The names of the Directors present at every meeting of the Board, 

and at every meeting of a committee; 

(c) The proceedings and resolutions of all meetings of the board and 

Committees. 

(2) Such minutes if signed by some person purporting to be the 

Chairman of the meeting or of the Board or Committee to which it 

refers, or by any two directors present thereat, or by the Chairman 

of the next succeeding meeting, shall be receivable in evidence 

without further proof of the matters therein contained or any other 

proof. 

Custody and use 

of common seal 7. (1) The Board shall provide a common seal for the purpose of the 

bank and may from time to time change the same; and such seal 

may be kept by such person and in such manner as the board from 

48 


time to time may determine, but shall not be used except by the 

authority of the board and in the presence of at least two Directors, 

or of one Director and the General Manager or other officer 

appointed for that purpose by the Board, who shall sign the 

document to which the seal is affixed. 

(2) The Board shall have full power to use the common seal in the 

execution of all or any of the powers hereby vested in them, or 

otherwise in relation to the affairs and business of the Bank as they 

in their discretion see fit. 

Directors may 8. No Director shall be disqualified by his office from 

contract with bank contracting with the bank nor shall any such contract entered into 

by or on behalf of the Bank in which any Director shall be in any 

way interested, be voided, nor shall any Director so contracting or 

being interested be liable to account to the bank for any profit 

realized by or arising out of any such contract but the fact of his 

being interested and the nature of his interest shall be disclosed by 

him at the meeting of the directors at which the contract is 

considered if his interest then exists, or in any other case at the 

first meeting of the Directors after the acquisition of his interest. 

A general notice that a Director is a member of a specified firm or 

company, and is to be regarded as interested in any subsequent 

transactions with such firm or company, shall be sufficient 

disclosure under this by-law, and after such general notice it shall 

not be necessary to give any special notice relating to any 

particulars transaction with such firm or company. 

When Director 9. No Director shall as a Director vote in respect of any 

may not vote contract in which he is so interested as aforesaid and he shall 

withdraw from the meeting of the Directors while any such contract 

is under consideration and the vote thereon is being taken. If any 

Director does so vote, his vote shall not be counted. 

Exception from 10. Nothing in by-law 9 shall apply to any contract made by 

Provisions of or on behalf of the Bank to give to the Directors or any 

by Law 9 of them any security for advances or by way of indemnity. 

Delegation of 11. (1) The Board may delegate any of its powers, other than 

functions of the power to appoint the General Manager, to 

Board committees consisting of two or more Directors, or to a Director, or 

to the General Manager or to any other officer of the bank selected 

by the Board; and may from time to time revoke any such 

delegation either wholly or in part and either as to persons or 

purposes. Every such committee, Director, General Manager or 

other officer shall, in the exercise of the powers delegated to it or 

him, conform to all such regulations as are prescribed by the 

Board. 

(2) The General Manager may, with the consent of the Board, in 

writing delegate to any of the officers of the Bank selected by him 

any of the powers delegated to him under paragraph (1). Every 

such officer shall in the exercise of the powers delegated to him 

under this paragraph conform to all such regulations as are 

prescribed by the Board and the General Manager. 

(3) All acts done by any such committee, Director, General Manager 

or other officer in conformity with such regulations and in fulfilment 

of the purposes of its or his appointment, but not otherwise, shall 

have the like force and effect as if done by the Board. 


PART II 

Powers and Duties of Directors 

Credits and loans 12. No loan, overdraft, advance or other accommodation 

Shall be sanctioned by the Board without the recommendation of 

the General Manager unless such loan, overdraft, advance or 

other accommodation is approved by all the Directors for the time 

being of the Bank, after considering the written observations of the 

General Manager of the Bank. 

Resolution without 13. (1) A resolution signed by all the Directors of the Bank for 

Board meeting the time being shall be as valid and effectual as if it had 

valid been passed at a meeting of the Board. 

(2) Any such resolution shall be recorded in the minutes 

book containing the proceedings of the Board as if it had been 

passed at a meeting of the Board. 

PART III 

Remuneration of Directors 

Remuneration of 

Directors 14. A Director may be remunerated out of the funds of the 

Bank in such manner and at such rates as the Minister 

May determine. 

Deduction for 15. A sum of fifty rupees shall be deducted from the 

absence from remuneration of the Chairman or any Director in respect 

meeting of each meeting of the Board, which he fails to attend. 

Remuneration 16. A Director in whose place a person has been appointed 

of acting Director to act shall not receive the remuneration attached to his 

office during the continuance of such acting appointment, but such 

remuneration shall be paid to the 

person acting in his place. 

Remuneration of 17. Where any Director is entrusted with any special 

Directors for mission of function or by request performs special 

Special Services services on behalf of the bank, the Board may grant him such 

additional remuneration as it thinks fit. The Directors may by repaid 

by the Bank all such reasonable travelling, hotel and incidental 

expenses as they may incur in attending meetings of the Board or 

of Committees of the Board or which they may otherwise incur in 

or about the business of the Bank. 

Remuneration of 18. All remuneration to which Directors who are public 

public officers who officers become entitled shall be paid to the 

are directors to be Consolidated Fund. 

paid to Consolidated 

Fund 

50 


PART IV 

Dividends and Reserve 

Half-yearly 19. The Board may- 

Dividends (i) on the report of the General Manager that the profits 

earned by the Bank during any half-year justifies the payment of a 

half-yearly dividend; and 

(ii) with the approval of the Minister declare a half-yearly 

dividend. 

Investment of 20. Any amounts standing to the credit of any reserve funds 

Reserve fund and also any other funds of the Bank not for the time 

being employed in or required for the purposes of the business of 

the bank shall be invested with the approval of the Minister in 

stock, shares, debentures, bonds or securities:- 

(a) recommended in writing by the General Manager and approved at 

a meeting of the Board by a majority of not less than two Directors; 

or 

(b) unanimously approved by all the Directors for the time being of the 

bank after considering the written observations of the general 

Manager of the Bank. 


PART IV 







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or 





BOC BRANCH NETWORK 

NORTH CENTRAL PROVINCE 

CENTRAL PROVINCE 

Anuradhapura 025-2222715 

Alawathugoda 066-2242327 Anuradhapura Bazaar 025-2222160 

Dambulla 066-2285270 Anuradhapura N'Town 025-2223685 

Digana 081-2375851 Aralaganwila 066-2279257 

Galagedara 081-2461214 Bakamoona 066-2256680 

Galaha 081-2467213 Dehiattahandiya 027-2250287 

Galewala 066-2289262 Eppawala 025-2249180 

Gampola 081-2350108 Galenbindunuwewa 025-2258280 

Gelioya 081-2310214 Galkiriyagama 025-2263062 

Hatton 051-2222015 Galnewa 025-2269580 

Kandapola 052-2229636 Hingurakgoda 027-2247642 

Kandy 081-2223697 Horawpothana 025-2278416 

Kandy 2nd 081-2234292 Ipalogama 025-2264279 

Katugastota 081-4471640 Jayanthipura 027-2222266 

Madawala 081-2476214 Kaduruwela 027-2222416 

Maskeliya 052-2277280 Kahatagasdigiliya 025-2247480 

Matale 066-2222262 Kebithigollawa 025-2298680 

Naula 066-2246280 Kekirawa 025-2264280 

Nawalapitiya 054-2222233 Madatugama 025-2264283 

Nuwara Eliya 052-2224047 Medawachchiya 025-2245683 

Padiyapelella 052-2287035 Medirigiriya 027-2248337 

Pallepola 066-2247272 Meegalewa 025-2269609 

Peradeniya 081-4475283 Mihintale 025-2266503 

Pilimatalawa 081-5740197 Nochchiyagama 025-2257880 

Pundaluoya 051-2233205 Padavi Parakramapura 025-2254018 

Pussellawa 081-2478642 Pemaduwa 025-2223307 

Rattota 066-2255280 Polonnaruwa New Town 027-2223009 

Rikillagaskada 081-2365314 Sewagama 027-2222585 

Talatuoya 081-2404334 Thambuttegama 025-2276280 

Talawakelle 052-2258280 Tirappana 025-2223352 

Udadumbara 081-2402317 

Walapana 052-2279180 NORTHERN PROVINCE 

Wattegama 081-2475838 Atchuvely 021-2263402 

Yatawatta 066-2221084 Chavakachcheri 021-2227396 

Chunnakam 021-2223969 

Jaffna 021-2225624 

EASTERN PROVINCE 

Jaffna 2nd 021-2226033 

Akkaraipattu 067-2279242 Kankesanthurai 021-2225654 

Ampara 063-2222981 Karainagar 021-2228278 

Batticaloa 065-2227410 Kayts 021-2225274 

Chenkalady 065-2240492 Kilinochchi 021-2283949 

Hingurana 063-2240037 Manipay 021-2227456 

Kalmunai 067-2229340 Mankulam 071-2348783 

Kaluwanchikudy 065-2250012 Mannar 023-2232337 

Kantale 026-2234361 Mullaitivu 021-2228941 

Kattankudy 065-2246613 Nelliady 021-2263260 

Kinniya 026-2236270 Point Pedro 021-2263570 

Muttur 026-2238327 Thirunelveli 021-2223948 

Nintavur 067-2250039 Vavuniya 024-2222141 

Pottuvil 063-2248021 

Sammanthurai 067-2260054 

Trincomalee 026-2223084 NORTH WESTERN PROVINCE 

Trincomalee Bazaar 026-2223880 Alawwa 037-2278180 

Valachchenai 065-2257708 Anamaduwa 032-2263280 

Bingiriya 032-2246107 

Chilaw 032-2223401 

Dankotuwa 031-2258180 

Dummalsuriya 032-2240690 

Galgamuwa 037-2253080 

Giriulla 037-2288080 


Hettipola 037-2291080 

Hiripitiya 037-2264080 

Ibbagamuwa 037-2259970 

Kalpitiya 032-2260702 

Kobeigana 037-2293101 

Kuliyapitiya 037-2281280 

Kurunegala 037-2233880 

Kurunegala 2nd 037-2222115 

Madampe 032-2247680 

Madurankuliya 032-2268003 

Maho 037-2275280 

Mawathagama 037-2299259 

Melsiripura 037-2250165 

Narammala 037-2249280 

Nattandiya 032-2254280 

Nikaweratiya 037-2260280 

Norochcholei 032-2268555 

Pannala 037-2246080 

Polgahawela 037-2243280 

Pothuhera 037-2237619 

Puttalam 032-2265209 

Ridigama 037-2252080 

Waikkal 031-2277280 

Wariyapola 037-2267348 

Welpalla 031-2299512 

Wennappuwa 031-2255280 

SABARAGAMUWA PROVINCE 

Aranayake 035-2258016 

Avissawella 036-2222099 

Ayagama 045-2250080 

Balangoda 045-2288390 

Dehiowita 036-2222580 

Deraniyagala 036-2249280 

Eheliyagoda 036-2259571 

Embilipitiya 047-2230980 

Hemmathagama 035-2257280 

Kahawatta 045-2270180 

Kalawana 045-2255280 

Kegalle 035-2230600 

Kegalle Bazaar 035-2222550 

Kuruwita 045-2262581 

Mawanella 035-2247915 

Nivitigala 045-2279280 

Pelmadulla 045-2274380 

Rakwana 045-2246280 

Rambukkana 035-2265280 

Ratnapura 045-2222100 

Ratnapura Bazaar 045-2222710 

Ruwanwella 036-2266280 

Warakapola 035-2267258 

Yatiyantota 036-2266281 

SOUTHERN PROVINCE 

Ahungalla 091-2264107 

Akuressa 041-2283280 

Ambalangoda 091-2256307 

Ambalantota 047-2223280 

84 


Angunakolapellasa 047-2229120 

Baddegama 091-2292280 

Batapola 091-2260405 

Beliatta 047-2243274 

Bentota 034-2275283 

Deniyaya 041-2273870 

Devinuwara 041-2222247 

Dickwella 041-2255280 

Elpitiya 091-2291280 

Galle 091-2232269 

Galle Bazaar 091-2234478 

Hakmana 041-2286280 

Hambantota 047-2220180 

Hikkakaduwa 091-2277813 

Imaduwa 091-2286030 

Kamburupitiya 041-2292213 

Kataragama 047-2235280 

Koggala 091-2283380 

Matara 041-2229280 

Matara Bazaar 041-2223920 

Middeniya 047-2247280 

Neluwa 091-2237530 

Pitigala 091-2291205 

Ruhunu Campus 041-2222681 

Talgaswela 091-2296480 

Tangalle 047-2240280 

Tawalama 091-2224459 

Tissamaharama 047-2237280 

Urubokka 041-2272280 

Walasmulla 047-2245280 

Weeraketiya 047-2246280 

Weligama 041-2250280 

Yakkalamulla 091-2286080 

UVA PROVINCE 

Badalkumbura 055-2250279 

Badulla 055-2222980 

Balleketuwa 055-2285160 

Bandarawela 057-2230014 

Bibile 055-2265480 

Buttala 055-2273980 

Diyatalawa 057-2229092 

Ettampitiya 055-2294080 

Girandurukotte 027-2254380 

Haldummulla 057-2268271 

Haputale 057-2268080 

Koslanda 057-2257780 

Lunugala 055-2263980 

Lunuwatta 057-2232742 

Mahiyangana 055-2258195 

Medagama 055-2265580 

Meegahakiwula 055-2245707 

Moneragala 055-2276180 

Padiyatalawa 063-2246003 

Passara 055-2288280 

Siyambalanduwa 072-2243900 

Thanamalwila 047-2234080 

Uva – Paranagama 057-2246010 

Welimada 057-2245984

Wellawaya 055-2274880 Athurugiriya 011-2561378 

Bambalapitiya 011-5368439 

Bandaragama 038-2290280 

WESTERN PROVINCE NORTH 

Battaramulla 011-2862575 

Andiambalama 011-2258184 Beruwala 034-2279899 

Biyagama 011-5558970 Bulathsinhala 034-2283116 

Borella 011-4612617 Dehiwala 011-2738335 

Borella 2nd 011-2685140 Dharga Town 034-2275411 

Central Bus Stand 011-5365118 Dodangoda 034-2281628 

Central Super Market 011-2446475 Hanwella 036-2253520 

City Office 011-2329413 Homagama 011-2855059 

Dematagoda 011-5335594 Horana 034-2260152 

Divulupitiya 031-2246280 Hyde Park 011-2687483 

Fifth City 011-2449646 Independent Square 011-2678073 

Gampaha 033-2226051 Ingiriya 034-2269280 

Grandpass 011-2448202 Kaduwela 011-2537999 

Hulftsdorp 011-2424843 Kalutura 034-2229804 

Ja-Ela 011-5342311 Katubedde 011-2625438 

Kadawatha 011-2920687 Kollupitiya 011-4795036 

Kandana 011-2232398 Kollupitiya 2nd 011-2574581 

Katunayake IPZ 011-2259583 Kottawa 011-2783313 

Kiribathgoda 011-2906149 Maharagama 011-2746146 

Kirindiwela 033-2267280 Malabe 011-2760753 

Kolonnawa 011-5557286 Matugama 034-2243590 

Kotahena 011-2448632 Milagiriya 011-2504627 

Lake House 011-5363723 Moratuwa 011-2646165 

Lake View 011-5359693 Mount Lavinia 011-2721060 

Main Street 011-2447198 Nugegoda 011-2821287 

Maradana 011-2689403 Padukka 011-2859112 

Minuwangoda 011-2295214 Panadura 038-2243323 

Mirigama 033-2275975 Panadura Bazaar 038-2243324 

Narahenpita 011-2368514 Parliament 011-2777309 

Negombo 031-2224711 Pelawatta 011-2785550 

Negombo Bazaar 031-2231297 Piliyandala 011-2614165 

Nittambuwa 033-2287280 Rajagiriya 011-5368641 

Peliyagoda 011-2945078 Ratmalana 011-2719735 

Personal 011-2446821 Thimbirigasyaya 011-2594538 

Pugoda 011-2404821 Union Place 011-2314757 

Ragama 011-2960291 Visakha 011-2556226 

Regent Street 011-2697035 Wadduwa 038-2232538 

Seeduwa 011-2259590 Wellawatta 011-2588941 

Veyangoda 033-2287279 

Wattala 011-5368394 

Welisara 011-2958485 CORPORATE BRANCHES 

Yakkala 033-2233591 Corporate 011-2345428 

Corporate 2 nd 011-2394584 

Metropolitan 011-2329419 

WESTERN PROVINCE SOUTH 

Pettah 011-2393544 

Agalawatta 034-2247480 Taprobane 011-2422267 

Aluthgama 034-2271413 Off Shore Banking Unit 011-2338765 


MEMBERS AND TRADING MEMBERS OF THE COLOMBO STOCK EXCHANGE 

MEMBERS – DEBT & EQUITY 

Annexure V 

Bartleet Mallory Stockbrokers (Pvt) Ltd.,Level “G”,”Bartleet House”65,Braybrooke Place, Colombo 

2. Tel.5220200, Fax: 2434985 E-mail: info@bartleetstock.com Kandy Branch Tel:081-5-622779, 081- 

5-622781, Matara Branch Tel:041-5-410005-6, 

Acuity Stockbrokers (Pvt) Ltd., Level 6,Acuity House, 53 Dharmapala Mawatha, Colombo 3.Tel: 

2206206, Fax: 2206298/9 E-mail: sales@acuitystockbrokers.com Kandy Branch Tel: 081-4474443, 

John Keels Stockbrokers (Pvt) Ltd., 130, Glennie Street, Colombo 2. Tel: 2326003, 2338066/7, 

2342066/7, 2446694/5, 2439047/8, 4-710721-4 Fax: 2342068, 2326863 E-mail: jkstock@keells.com 

Asha Phillip Securities Ltd., Level 4, “Millennium House”, 46/58,Navam Mawatha, Colombo 2. Tel: 

2429100, Fax: 2429199 E-mail: apsl@ashaphillip.net, Matara Branch Tel:041-2220093, 041-5- 

419956, Kandy Branch Tel:081-4-474118, 081-4-471929, Kurunegala Branch Tel: 037-4691844, 

Negombo Branch Tel:031-2227474, Fax:031-2227474 

Assetline Securities (Pvt) Ltd., 3rd Floor, Forbes & Walkers Building, 46/38, Navam Mawatha, 

Colombo 2. Tel: 4700111, 2307366 Fax: 4700112,2307365 website: www.dpgsonline.com E-mail: 

dpgsl@sltnet.lk Matara Branch Tel: 041-4390766/7, 041-2220091, 041-5-419954, Kandy Branch Tel: 

081-4481638/9, 081-4-474233, Kurunegala Branch Tel: 037-4690384/5,037-4691843, 

Somerville Stockbrokers (Pvt) Ltd.,137, Vauxhall Street, Colombo 2. Tel:2329201-5, 

2332827,2338292-3 Fax: 2338291,E-mail: ssb@web-lk.com 

J B Securities (Pvt) Ltd.,150, St.Joseph Street, Colombo 14. Tel: 2490900,077-2490900,077- 

2490901 Fax: 2430070,2446085, 2447875 E-mail: jbs@jb.lk 

Lanka Securities (Pvt) Ltd., 228/2, Galle Road, Colombo 4. Tel: 4706757,2554942 Fax: 4706767 

website: www.lsl.lk E-mail: lankasec@sltnet.lk Kandy Branch Tel: 081-4473799, Fax: 081-5625181, 

Kurunegala Branch Tel:037-4696322, Fax: 037-5624216, Negombo Branch Tel: 031-5670515,031- 

5670420, Fax: 031-5310683 

Asia Securities (Pvt) Ltd.,Level 21, West Tower, World Trade Centre, Echelon Square, Colombo 1. 

Tel: 2423905, 5320000 Fax: 2336018 E-mail: enquiry@asiacapital.lk 

Ceylinco Stockbrokers (Pvt) Ltd.,Ceylinco House,Level 9, 69, Janadhipathi Mawatha, Colombo 

1.Tel: 4-714300,4-714388,4-714389,0777-891871,0777-896064, Fax:2387228 E-mail: 

info@ecsbl.com web site: www.ecsbl.com Kurunegala Branch Tel: 037-4691831 

Capital TRUST Securities (Pvt) Ltd.,42, Sir Mohamed Macan Markar Mawatha, 

Colombo 3.Tel: 5-335225, Fax:5-365725 E-mail: inquiries@capitaltrust.lk, web site: 

www.capitaltrust.lk Kandy Branch Tel:081-5628072, Fax: 081-5741741, Kurunegala Branch Tel: 037- 

2229116, Matara Branch Tel: 041-5670570, Negombo Branch Tel:031-5675291-4, Fax: 031-2227894 

S C Securities (Pvt) Ltd., 2 nd Floor, 55 D.R. Wijewardena Mawatha, Colombo 10. Tel:4711000, 

Fax:2394405 E-mail: cscres@sltnet.lk, Matara Branch Tel: 041-2220090,041-5-419953, Kandy 

Branch Tel: 081-4-474299 

C T Smith Stockbrokers (Pvt) Ltd.,4-14, Majestic City, 10, Station Road, Colombo 4. Tel: 2552290- 

4, Fax: 2552289 E-mail: ctssales@sltnet.lk 

86 B O C DEBENTURE PROSPECTUS

D N H Financial (Pvt) Ltd.,Level 16, West Tower, World Trade Centre, Colombo 1. Tel:5732222, 

Fax: 5736264, E-mail: info@dnhfinancial.com 

N D B Stockbrokers (Pvt) Ltd.,5 th Floor, NDB Building,,40, Navam Mawatha, Colombo 2. Tel: 

2314170 to 2314178 Fax: 2314180 E-mail: mail@ndbs.lk 

TRADING MEMBERS- DEBT & EQUITY 

• Capital Alliance Securities (Pvt) Ltd.,Level 5, “Millennium House”, 46/58, Navam Mawatha, 

Colombo 2. Tel:2317777 Fax: 2317788, Matara Branch Tel:041-4390610, Negambo Branch Tel: 031- 

2227843-4, Kurunegala Branch Tel:037-2222034-5 

• SMB Securities (Pvt) Ltd.,47, Dharmapala Mawatha, Colombo 3. Tel: 5539593 Fax:2339292 E-mail: 

smbsecurities@gmail.com 

• First Guardian Equities (Pvt) Ltd.,32 nd Floor, East Tower, World Trade Centre, Colombo 1. 

Tel:5884400 Fax: 5884401, E-mail: info@firstguardianequities.com 

• Taprobane Securities (Pvt) Ltd., 2 nd Floor, 10, Gothami Road, Colombo 08. Tel: 5231000 Fax: 

5328177 E-mail: info@taprobane.lk, dinal@taprobane.lk, website: www.taprobanestocks.com 

• Amana Securities Ltd.,532/4F, Srikotha Lane, Galle Road, Colombo 3. Tel: 2372561-4, Fax: 

2372565 E-mail: info@asl.lk 

• SKM Lanka Holdings (Pvt) Ltd., 377/3, Galle Road, Colombo 3. Tel: 2372413-4, Fax: 2372416 Email: 

info@skmlankaholdings.com 


87

DETAILS OF THE PROPERTIES 

FREEHOLD PROPERTY 

Annexure VI 

Alawwa Branch 64, Giriulla Road, Alawwa 

Aluthgama Branch 267, Galle Road, Aluthgama 

Ambalangoda Branch 274, Main Street, Ambalangoda 

Ambalantota Branch 11, Wanduruppa Road, Ambalantota 

Badulla Fernham Bunglow & Prop. Badulla 

Badulla Uva Pro. Off. 17, Hill Drive, Keppetipola Road, Badulla. 

Balangoda Branch 137, Main Street, Balangoda 

Bambalapitiya Branch 20, Galle Road, Colombo 04 

Bandarawela Branch 198B, Badulla Road, Bandarawela 

Bandarawela Holiday Home Bindunuwewa, Bandarawela 

Batticaloa Branch Covington Road, Batticaloa 

Borella Branch 71, Danister de Silva Mawatha, Colombo 08 

Chilaw Branch Radaguru Edmund Peiries Mawatha, Chilaw 

Colombo 01- City Office 41, Bristol Street, Colombo 01 

Colombo 01- G.O.H. (Y.S.B) York Street, Colombo 

Colombo 07- G.M’S Bangalow Green Path Colombo 7 

Colombo Darly Rd. Stores Browns Bldg Colombo 10 

Dehiowita Branch 62, Main Street, Dehiowita 

Dehiwala Branch 207, Galle Road, Dehiwala 

Dickoya Upper/ Lower Glencarn Bung. Dickoya 

Dummalasooriya Branch 227, Kuliyapitiya, Madampe Road, Dummalasooriya 

Galaha Branch 59/37, Deltota Road, Galaha 

Galle Branch 2, Gamini Road, Galle 

Galle Province Office 2, Light House Street, Fort, Galle 

Gampola Branch 44, Kadugannawa Road, Gampola 

Grand Pass Branch 703, Sirimawo Bandaranayeke Mawatha, Colombo 14 

Hakmana Branch Beliatta Road, Hakmana 

Haputale Branch (Browns) 20, Station Road, Haputale 

Haputale Woodland Bunglow Bandarawela Road, Haputale. 

Hatton Branch 46, Circular Road, Hatton 

Hatton Staff Quart Hatton 

Horana Branch 87, Anguruwathota Road, Horana 

Idama Branch Moratuwa 

Imaduwa Branch Ahangama Road, Imaduwa 

Ja Ela Branch 19, Negombo Road, Ja Ela 

Jaffna Area Office 56, Stanley Road, Jaffna 

Jaffna Branch 476, 476A, Hospital Road, Jaffna 

Kadawatha Branch 469, Ragama Road, Kadawatha 

Kalutara Area Office Kalutara 

Kalutara Branch 218, Galle Road, Kluthara South, 

Kaluthara 

Kandy 2 nd City Branch 22, Dalada veediya, Kandy 

Kegalle Branch 110, Colombo Road, Kegalle 

Kollupitiya- Walkers Sons Ltd. 28, St. Michael’s Road, Colombo 03 

88 B O C DEBENTURE PROSPECTUS

Kurunegala AGM’s Quart’s Kurunegala 

Kurunegala Bazaar Branch Commercial Complex, Kurunegala 

Kurunegala Branch (Cond.) Kurunegala 

Kurunegala Chief Mgr’s Quart 34, Colombo Road, Kurunegala 

Kurunegala Province Office 18, Mahinda Mawatha, Kurunegala 

Lindula Ridge Holiday Home Lindula 

Madampe Branch 10, Station Road, Madampe 

Madurankuliya Branch 16A, Main Street, Madurankuliya 

Maharagama C.T.I Maharagama 

Maharagama Branch 88, High Level Road, Maharagama 

Mannar Branch (Ice factory) 52, Pallimunai Road, Grand Bazaar, Mannar 

Maskeliya Branch 66, Upcot Road, Maskeliya 

Matara Bazaar Branch Gunawardena Mawatha, Matara 

Matara Branch 11, Kumarathunga Mawatha, Matara 

Mathugama Branch 72, Agalawatta Road, Matugama 

Moneragala Branch and Mgr’s Quart. 401, Wellawaya Road, Moneragala 

Mutur Branch 38, Batticaloa Road, Muttur 

Narammala Branch 139, Negombo Road, Narammala 

Nawalapitiya Branch 6, Gampola Road, Nawalapitiya 

Negombo Branch 118, Rajapakse Broadway, Negombo 

Nelliadi Branch Nelliadi 

Nugegoda Branch 174, High Level Road, Nugegoda 

Nuwara Eliya Branch 43, Lawson Street, Nuwara Eliya 

Nuwara Eliya Holiday Home Hill Street, Nuwara Eliya 

Nuwara Eliya Property Hill Street, Nuwara Eliya 

Nuwara Eliya Staff Quarters Hill Street, Nuwara Eliya 

Panadura Branch 21, Susantha Mawatha, Panadura 

Pettah Branch 212/63, Gas Works Street, Colombo 11 

Potuvil Branch Potuvil Arugambay Road, Division No. 3, Potuvil 

Rambukkana Branch Rambukkana 

Ratnapura Branch 6, Dharmapala Mawatha, Ratnapura 

Ratnapura Branch (BMC. 1/L) 163, Main Street, Ratnapura 

Talawakele Branch 23,25,29, Hatton Road, Talawakele 

Talawakele Staff Quart. Talawakele 

Tangalle Branch Tangalle 

Trincomalee Branch 24, Inner Harbour Road, Trincomalee 

Valachchenai Branch Main Street, Valachchenai 

Wadduwa Branch 557/A, Galle Road, Wadduwa 

Weligama Branch 239, Main Street, Weligama 

Wellawatte Branch 149/2, Galle Road, Colombo 06 

World Trade Centre Colombo 01 Level 1 & 2, West Tower 


LEASEDHOLD PROPERTY 

Location Address 

Ampara Staff Quart. Ampara 

Ampara Branch 115, A D S Senanayaka Street, Ampara 

Ampara Manager’s Quart. Ampara 

Anuradhapura Branch Quarters Anuradhapura 

Anuradhapura Branch Maithripala Senanayake Mawatha, Anuradhapura 

Anuradhapura Pilgrims Rest Anuradhapura 

Anuradhapura Province office Anuradhapura 

Anuradhapura Staff Quarters Anuradhapura 

Aralaganwila Branch Aralaganwila, Aralaganwila 

Avissawella Branch 47,Dharmapala Mawatha, Avissawella 

Badulla Branch Bank Road, Badulla 

Bakamuna Branch Bakamuna 

Bandaragama Branch Janadhipathi Mawatha, Bandaragama 

Bentota Branch Tourist Village, Bentota 

Bulathsinhala Branch 40,Horana Road, Bulathsinhala 

Buttala Branch 23, Moneragala Road, Buttala 

Dehiattakandiya Branch New Town, Dehiattakandiya 

Devinuwara Branch Tangalle Road, Devinuwara 

Elpitiya Branch Janadhipathi Mawatha, Elpitiya 

Embilipitiya Branch 545, New Town, Embilipitiya 

Embilipitiya Staff Quarters Embilipitiya 

Galenbindunuwewa Branch Denzil Kobbekaduwa Mawatha, 

Galenbindunuwewa 

Galgamuwa Branch 67,69, Anuradhapura Road, Galgamuwa 

Galkiriyagama Branch New Town, Galkiriyagama 

Galnewa Branch Thambuttegama Road, Galnewa 

Girandurukotte Branch New Town, Girandurukotte 

Hambantota Br. & Area Manager’s Quarters 33,Tower Hill Road, Hambantota 

Hambantota Kachcheri Branch Hambantota 

Hambantota Staff Quarters Hambantota 

Hikkaduwa Branch 223,Galle Road, Hikkaduwa 

Horowpathana Branch Anuradhapura Road, Horowpathana 

Hulftsdrop Branch 30, St.Sebastian Hill,Colombo 12 

Kahatagasdigiliya Branch Trincomalee Road, Kahatagasdigiliya 

Kalmunai Br. & Manager’s Quarters 78,Kitddanki Road, Kalmunai 

Kamburupitiya Br. & Manager’s Quarters School Lane, Kamburupitiya 

Kantale Bazaar Branch 91, Akrabodhi Mawatha, Kantale 

Kataragama Branch 315, Tissamaharama Road, Kataragama 

Kataragama Pilgrims Rest Kataragama 

Kataragama Staff Quarters Kataragama 

Kekirawa Branch 3,Habarana Road, Kekirawa 

Koggala Branch Koggala, Habaraduwa 

Kuliyapitiya Branch 70, Madampe Road, Kuliyapitiya 

Kuruwita Branch 60, Ratnapura Road, Kuruwita 

Madatugama Branch Kekirawa, Dambulla Road, Madatugama 

Mahiyangana Branch 7,New Town, Badulla Road, Mahiyangana 

Mannar Br. & Manager’s Quarters Mannar 

Matale Br. & Manager’s Quarters 5/2, Trincomalee Street, Matale 

Medawachchiya Branch 36, Jaffna Road, Medawachchiya 

Medirigiriya Branch School Junction, Medirigiriya 

Meegallewa Branch Meegallewa, Meegallewa 

Meegoda Branch (Economic Centre) Meegoda 

Mihintale Branch Trincomalee Road, Mihintale 

90 


New Head Office Building 4, Bank of Ceylon Mawatha, Colombo 01 

Nikaweratiya Branch Puttalam Road, Nikaweratiya 

Nittambuwa Branch Market Complex, Nittambuwa 

Nivitigala Branch 72, Kalawana Road, Nivitigala 

Nochchiyagama Branch Main Street, Nochchiyagama 

Nochchiyagama Staff Quarters Nochchiyagama 

Nuwara Eliya Municipal Rest Nuwara Eliya 

Padavi- Parakramapura Branch Padavi, Parakramapura 

Padavi- Parakramapura Staff Quarters Padavi- Parakramapura 

Pannala Branch Public Ground Road, Pannala 

Peradeniya Branch 115/7, Sirimavo Bandaranayake Mawatha, 

Peradeniya 

Pitigala Branch 39, North Pitigala Road, Pitigala 

Polonnaruwa New Town Branch Polonnaruwa 

Polonnaruwa Staff Quarters Polonnaruwa 

Puttalam Branch & Manager’s Quarters 53,Kurunegala Road, Puttalam 

Puttalam Kachcheri Branch Puttalam 

Puttalam Staff Quarters Puttalam 

Talgaswela Branch Talgaswela 

Thambuttegama Branch Rajanganaya Road, Thambuttegama 

Thambuttegama Staff Quarters Thambuttegama 

Tissamaharama Branch 70,Main Street, Tissamaharama 

Torrington Branch 30A, Independent Avenue, Colombo 7 

Ududumbara Branch 44,46, Mahiyangana Road 

Vanni Area Office & Quarters Vavuniya. 

Vavuniya Branch & Manager’s Quarters 75, Station Road, Vavuniya 

Vavuniya Staff Quarters Vavuniya. 

Welimada Branch 12,12A, Hemapala Munidasa Mawatha, Welimada 

Wellawaya Branch Tissamaharama Road, Wellawaya 













Peradeniya 






























Peradeniya 






























Peradeniya 






























Peradeniya 






























Peradeniya 



















Financial Reports 2009 

BANK OF CEYLON 

1. Summary of Significant Accounting Policies 

1.1 Basis of Preparation 

The Financial Statements of the Bank and the Group encompassing the Balance Sheet, Income Statement, Cash 

Flow Statement, and Statement of Changes in Equity, Accounting Policies and the Notes thereto are prepared in 

conformity with Accounting Standards issued by The Institute of Chartered Accountants of Sri Lanka and on the basis 

of historical cost convention except otherwise stated as required by the above standards, which have been applied 

consistently with that of the previous year. Except as indicated, the Financial Statements presented in Sri Lankan 

Rupees have been rounded to the nearest thousand. No adjustment has been made for inflationary factors affecting 

the Financial Statements except on certain land and buildings, investment properties and dealing securities. 

1.2 Estimates and Management Judgements 

The preparation of Financial Statements requires management to make judgements, estimates and assumptions that 

affect the application of policies and reported amount of assets and liabilities, income and expenses. The estimates 

and associated assumptions are based on historical experience and various other factors that are believed to be 

reasonable under the circumstances. The estimates and assumptions are reviewed on an ongoing basis. Revisions 

to accounting estimates are recognised in the period in which the estimates are revised and/or in future periods if the 

revision affects 

future periods too. 

1.3 Materiality and Aggregations 

Each material class of similar items is presented separately in the Financial Statements. Items of a dissimilar nature 

or function are presented separately unless they are immaterial. 

1.4 Statement of Compliance 

The Financial Statements of the Bank and its Subsidiaries are prepared in accordance with the Sri Lanka Accounting 

Standards (SLASs) laid down by the Institute of Chartered Accountants of Sri Lanka and comply with the 

requirements of Bank of Ceylon Ordinance and Banking Act No. 30 of 1988 and amendments thereto. In the case of 

Financial Statements of Subsidiaries in addition to the above, they comply with the Companies Act No. 07 of 2007, 

Finance Leasing Act No. 56 of 2000, Finance Companies Act No. 78 of 1988 and Insurance Industry Act No. 43 of 

2000. The Financial Statements of the Bank and its Subsidiaries present fairly the financial position, financial 

performance and cash flows. 

1.5 Foreign Currency Translation 

Functional and Presentation Currency 

Items in the Financial Statements of the Bank and each of its Subsidiaries are translated using their functional 

currency, being the currency of the primary economic environment in which the entity operates. The Financial 

Statements are presented in Sri Lankan Rupees, which is the functional and presentation currency of the Bank and 

its Subsidiaries. 

1.5.1 Foreign Currency Transactions 

Transactions in foreign currencies are measured at the exchange rate ruling at the date of the transaction. Monetary 

assets and liabilities denominated in foreign currencies are translated into Sri Lankan Rupees at the exchange rate 

ruling at the Balance Sheet date. Foreign exchange differences arising from this translation are recognised in the 

Income Statement. Non-monetary assets and liabilities measured at cost in a foreign currency are translated using 

the exchange rate at the date of the transaction. Non-monetary assets and liabilities measured at fair value in foreign 

currencies are translated into Sri Lankan Rupees at the exchange rate ruling at the date the fair value was 

determined. 

1.5.2 Foreign Operations 

The results and financial position of the Group’s operations whose functional currency is not Sri Lankan 

Rupees are translated into Sri Lankan Rupees as follows: 

• Assets and liabilities are translated at the exchange rate ruling at the Balance Sheet date; 

• Income and expenses in the Income Statement are translated at an average exchange rate approximating the 

exchange rates at the dates of the transactions; and in the case of income and expenses of overseas branches, 

the monthly average exchange rates are applied for translation 

• Resulting exchange differences are recognized as a separate component of equity 

• Forward exchange contracts are valued at the forward market rates ruling on the date of the Balance Sheet. 

Resulting net unrealized gains and losses are dealt with through the Income Statement. 


100 

1.5.3 Consolidation Adjustments 

On consolidation, foreign exchange differences arising from the translation of net investments in foreign entities, as 

well as any borrowings and instruments designated as foreign currency hedges of such investments are taken to 

capital reserves. When a foreign operation is disposed of, such currency translation differences are recognized in the 

Income Statement as part of the gain or loss on disposal. 

1.6 Basis of Consolidation 

The Bank’s Financial Statements comprise the consolidation of the Financial Statements of the Domestic Banking 

Unit, the Off-shore Banking Unit and the foreign operations that are integral to the Bank. The Group Financial 

Statements comprise consolidation of the Financial Statements of the Bank, its Subsidiaries in terms of the Sri Lanka 

Accounting Standard No. 26 (Revised 2005) on ‘Consolidated and Separate Financial Statements’ and Associates in 

terms of the Sri Lanka Accounting Standard No. 27 (Revised 2005) on ‘Investments in Associates’. 

1.6.1 Subsidiaries 

Subsidiaries are those companies in which the Bank, directly or indirectly, has an interest of more than one-half of the 

voting rights and has control over the financial and operating policies. Subsidiaries are consolidated from the date on 

which effective control is transferred to the Bank and are no longer consolidated from the date of disposal. A listing of 

the Bank’s Subsidiaries is given in Note 27 to the Financial Statements. Separate disclosure is made in respect of 

minority interest. 

1.6.2 Associates 

Associates are entities in which the Group has significant influence, but not control, and generally holds a 

shareholding of between and including 20% and 50% of the voting rights. The Group’s investments in Associates are 

initially carried at cost. The carrying amount is increased or decreased to recognise the Group’s share of net assets 

of the Associate, less any impairment in value after the date of acquisition. Where the Group’s share of losses in an 

Associate equals or exceeds its interest in the Associate, including any unsecured receivables, the Group does not 

recognise further losses, unless it has incurred obligations or made payments on behalf of the Associate. The results 

of the Associates are taken from the latest audited accounts or unaudited management accounts of the Associates 

prepared at dates not more than three months prior to the end of the financial year of the Group. A listing of the 

Bank’s principal Associates is shown in Note 26 to the Financial Statements. 

1.6.3 Business Combinations and Goodwill 

Business combinations are accounted for using the Purchase Method of Accounting as per the requirements of the 

Sri Lanka Accounting Standard No. 25 (Revised 2004) on ‘Business Combinations’. This involves recognising 

identifiable assets and liabilities of the acquired business at fair value. Any excess of the cost of acquisition over the 

fair values of the identifiable net assets acquired, is recognized as goodwill. If the cost of acquisition is less than the 

fair values of the identifiable net assets acquired, the difference is identified as discount on acquisition and is 

recognised directly in the Income Statement in the year of acquisition. Goodwill acquired in a Business Combination 

is initially measured at cost, being the excess of the cost of the Business Combination over the Bank’s interests in the 

net fair value of the identifiable assets, liabilities including contingent liabilities acquired. Sri Lanka Accounting 

Standard No. 25 (Revised 2004) on ‘Business Combinations’ requires that following the initial recognition, goodwill is 

to be measured at cost, less any accumulated impairment losses and goodwill to be reviewed for impairment 

annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. 

The acquired goodwill is written-off in full in the year of acquisition. When Subsidiaries/Associates/other business 

units are sold, the difference between the selling price and the net assets plus cumulative translation differences and 

unimpaired goodwill, if any, is recognised in the Income Statement in the year of disposal. 

1.6.4 Transactions Eliminated on Consolidation 

All intra-group transactions, balances, income and expenses are eliminated on consolidation. Profits and losses 

resulting from transactions between the Group and its Associates are also eliminated on consolidation to the extent of 

the Group’s interests in the Associates. Where necessary, adjustments are made to the Financial Statements of 

Subsidiaries and Associates to bring the Accounting Policies used in line with those used by the Group. 

1.7 Taxation 

Provision for taxation comprises current and deferred tax. Provision for taxation is recognized in the Income 

Statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in 

equity. 

1.7.1 Current Taxation 

Provision for taxation on Sri Lankan operations is made on the basis of the net profit for the year as adjusted for 

taxation purposes in accordance with the provisions of the Inland Revenue Act No. 10 of 2006 and the amendments 

thereto. Provision for taxation on the overseas branches is made on the basis of the net profit for the year as adjusted 

for taxation purposes in accordance with the provisions of the relevant statutes at the rates specified in Note 15. 


1.7.2 Deferred Taxation 

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of 

assets and liabilities and their carrying amounts in the Financial Statements. Temporary differences are not 

recognised for goodwill, that is not deductible for tax purposes and for the initial recognition of assets or liabilities that 

neither affects accounting nor taxable profit. The amount of deferred tax is provided based on the expected manner 

of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted at the Balance 

Sheet date. Deferred tax assets that arise from unused tax losses and unused tax credits are recognised to the 

extent that it is probable that future taxable profits will be available against, which the temporary differences can be 

utilised. Deferred tax is provided on temporary differences arising on accelerated tax depreciation, investments in 

Subsidiaries and Associates and also securities except where the timing of the reversal of the temporary difference 

can be controlled and also it is possible that the temporary difference will not be reversed in the foreseeable future. 

1.7.3 Value Added Tax on Financial Services 

During the year, the Bank’s total value addition was subjected to a 20% Value Added Tax as per Section 25 A of the 

Value Added Tax Act No. 14 of 2002 and amendments thereto. 

1.7.4 Economic Service Charge (ESC) 

In terms of the provisions of the Economic Service Charge Act No. 13 of 2006, ESC is payable on the liable turnover 

at specified rates. ESC paid is deductible from the income tax liability. Any unclaimed liability can be carried forward 

and set off against the income tax payable for a further four years. 

1.7.5 Social Responsibility Levy (SRL) 

In terms of the provisions of the Finance Act No. 5 of 2005, as amended by the Finance Act No. 11 of 2006, SRL is 

payable at the rate of 1.5% on all taxes and levies chargeable as specified in the First Schedule of the Act. 

1.7.6 Withholding Tax on Dividends 

Dividend distributed out of taxable profit of the Subsidiaries and Associate Companies attracts a 10% deduction at 

source and is not available for set off against the tax liability of the Bank. Thus, the withholding tax deducted at 

source is added to the tax expense in preparing the consolidated Financial Statements as a consolidation 

adjustment. 

2. Assets and Basis of Their Valuation 

2.1.1 Loans and Advances 

All loans and advances are recognised when cash is advanced to borrowers. Loans and advances are stated in the 

Balance Sheet net of provisions for loan losses and net of interest, which is not accrued to revenue. 

2.1.2 Finance Leases 

Assets leased to customers, which transfer substantially all the risks and rewards associated with ownership other 

than legal title for a specific period are accounted for as finance leases. Lease receivables are stated in the Balance 

Sheet net of initial rentals received, unearned lease income and provision for doubtful of rentals. 

2.1.3 Credit Card Receivables 

Amounts receivable on credit cards are included in advances to customers at the amounts expected to be recovered. 

2.2 Non-Performing Loans and Provision for Loan Losses 

2.2.1 (a) Non-Performing Loans 

Loans, advances and finance leases which are 90 days or more in arrears of due capital or interest are classified as 

non-performing. In addition, credit facilities are classified as non-performing where full recoverability in accordance 

with agreed terms is in doubt due to circumstances affecting the repayment capacity of the borrower. 

2.2.1 (b) Foreclosed Properties 

Foreclosed properties represent properties that are acquired in full or partial satisfaction of debts. These properties 

are classified as non-performing advances and accounted for at the lower of cost or market value on an individual 

property basis. The shortfall between the market value of the foreclosed assets and the related loan outstanding is 

recognised as a provision for loan losses in the Income Statement. Foreclosed properties are not subject to 

depreciation.Subsequent gains and losses on the disposal of the foreclosed properties are taken into account in 

determining operating profits. 


2.2.2 Provision for Loans, Advances and Finance Leases 

2.2.2 (a) Provision for Non-Performing Loans and Advances 

Provisions for non-performing loans and advances are made on the basis of a continuous review of all loans and 

advances in accordance with the applicable Accounting Standards and the regulations imposed by the Central Bank 

of Sri Lanka. Accordingly, specific provisions have been made as follows: 

Period outstanding Classification Provision made net of realizable value of the security 

3 to 6 months Special mention ------ 

6 to 12 months Substandard 20% 

12 to 18 months Doubtful 50% 

18 months and over Loss 100% 

Additional provisions have also been made over and above the minimum percentages specified above, on a case-bycase 

basis depending on the risk associated with such loans. When a loan is deemed uncollectable, it is written-off 

against the related provision for impairments. Subsequent recoveries are credited to the Income Statement. In 

addition, the value of the security is determined on the ‘Hair Cut Rule’ imposed by the Central Bank of Sri Lanka ie. 

the extent up to which the Forced Sale Value (FSV) of immovable property can be counted as the value of security 

(which is given below) in calculating the provisioning for nonperforming advances. 

% of FSV of Immovable Property that can be 

considered as the net value of security 

Item Freehold property Leasehold property 

For the advances in the substandard and doubtful category 75 60 

For the advances in the Loss Category 

Less than 12 months 75 60 

More than 12 months but less than 24 months 60 50 



More than 48 months 40 Nil 

2.2.2 (b) Provision for Lease Rentals Receivable in Arrears 

When the rental is in arrears over a consecutive period of 90 days, the specific provision is made as follows: 

Period of outstanding Classification Provision 

90 - 180 days Special mention -------- 

Over 180 days Loss 100% 

Category Provision 

A 100% of capital outstanding of lease assets minus 50% of the invoice value/ condition 

and valuation report whichever is lower, net of upfront rentals and cash security 

obtained, if any. 

B 100% of capital outstanding net of upfront rentals and cash security obtained, if any. 

Category A Identified at the time of termination of lease contract. 

Category B Identified at the time of loss of the assets. 

2.2.2 (c) Provision for Credit Card Receivables 

When the required minimum payment is in arrears on credit card receivables, specific provision is made as follows: 

Period of outstanding Classification Provision 

3 - 4 months Special mention - 

4 - 6 months Substandard 25% 

6 - 8 months Doubtful 50% 

Over 8 months Loss 100% 

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2.2.2 (d) Provision for Pawning 

A 100% specific provision is made for the total amount advanced for unsold articles at every auction. 

2.2.2 (e) Provision for Regular Advances 

Apart from specific provisions, the Bank also carries general provision of 1% on total performing and special mention 

loans and advances for credit losses to absorb all losses inherent in its loan portfolio including credit card 

receivables, lease rental receivables and pawning. 

2.3 Investments 

2.3.1 Investments in Subsidiaries 

Investments in Subsidiaries are accounted for under the cost method of accounting in the Bank’s Financial 

Statements in accordance with the Sri Lanka Accounting Standard No. 26 (Revised 2005) on ‘Consolidated and 

Separate Financial Statements’. Accordingly, investments in Subsidiaries are stated in the Bank’s Balance Sheet at 

cost, less impairment losses, if any. 

2.3.2 Investments in Associates 

Investments in Associates are accounted for under the cost method in the Bank’s Financial Statements and under the 

equity method in the Group’s Financial Statements in accordance with the Sri Lanka Accounting Standard No. 27 

(Revised 2005) ‘Investment in Associates’. In the Bank’s Balance Sheet, investments in Associates are stated at 

cost, less impairment losses, if any. Under the equity method, the investments in Associates are initially accounted 

for at cost and the carrying amount is adjusted for post acquisition changes in the Bank’s share of net assets of the 

Associates, less any impairment. 

2.3.3 Dealing Securities 

These are marketable securities acquired and held with the intention of re-sale over a short period of time. Such 

securities are marked to market and carried at market value in the Balance Sheet. Any gains/losses on mark to 

market valuation are dealt with through the Income Statement. 

2.3.4 Investment Securities 

These are acquired and held for yield or capital growth in the medium or long term. Such securities are recorded at 

cost. Changes in market values of these securities are not taken into account, unless there is considered to be 

diminution in value, which is other than temporary. 

2.4 Property, Plant & Equipment 

2.4.1 Basis of Recognition 

Property, plant & equipment are recognised if it is probable that future economic benefits associated with the assets 

will flow to the Group and the cost of the asset can be reliably measured. 

2.4.2 Measurement 

An item of property, plant & equipment that qualifies for recognition as an asset is initially measured at its cost of 

purchase directly attributable to the acquisition of the asset or construction or valuation together with any incidental 

expenses thereon. The cost of self-constructed assets includes the cost of materials and direct labour, any other 

costs directly attributable to bringing the asset to a working condition for its intended use and the costs of dismantling 

and removing the items and restoring the site on which they are located. 

2.4.3 Cost Model 

The Group applies cost model to plant & equipment and records at cost of purchase or construction together with any 

incidental expenses thereon, less accumulated depreciation and any accumulated impairment losses. 

2.4.4 Revaluation Model 

The Group applies the revaluation model for the entire class of freehold land and buildings. Such properties are 

carried at a revalued amount, being their fair value at the date of revaluation, less any subsequent accumulated 

depreciation and subsequent accumulated impairment losses. Freehold land and buildings of the Group are revalued 

every seven years on a roll over basis to ensure that the carrying amounts do not differ materially from the fair values 

at the Balance Sheet 

date. On revaluation of an asset, any increase in the carrying amount is credited directly to equity, under capital 

reserve or used to reverse a previous revaluation decrease relating to the same asset, which was debited to the 

Income Statement. In this circumstance, the increase is recognised as income to the extent of the previous writtendown. 

Any decrease in the carrying amount is recognised as an expense in the Income Statement or debited directly 

to equity under revaluation reserve to the extent of any credit balance existing in the capital reserve in respect of that 

asset. 


2.4.5 Subsequent Costs 

The cost of replacing part of an item of property, plant & equipment is recognised in the carrying amount of the item if 

it is probable that the future economic benefits embodied within that part will flow into the Group and its cost can be 

reliably measured. 

2.4.6 Restoration Costs 

The cost incurred on repairs and maintenance of property, plant & equipment in order to restore or maintain future 

economic benefits is charged to Income Statement as incurred. 

2.4.7 Derecognition 

The carrying amount of an item of property, plant & equipment is derecognised on disposal or when no future 

economic benefits are expected from its use or disposal. The gain or loss arising from the derecognition of an item of 

property, plant & equipment is included in the Income Statement when the item is derecognised. When replacement 

costs are recognised in the carrying amount of an item of property, plant & equipment, the remaining carrying amount 

of the replaced part is derecognised. 

2.4.8 Depreciation 

The Group provides depreciation on straight-line basis over the periods appropriate to the estimated useful lives of 

the different types of assets. Provisioning for depreciation of property, plant & equipment is made on pro-rata basis. 

The depreciation on domestic assets is determined using the following estimated useful lives. 

Freehold Building Over 40 years 

Office Equipment Over 08 years 

Furniture & Fittings Over 08 years 

Computer Equipment Over 05 years 

Motor Vehicles Over 04 years 

The future economic benefits embodied in the assets that are used by overseas branches are different from that of 

used in domestically in terms of the asset’s expected utility to these branches. Accordingly, the depreciation on 

assets belonging to overseas branches is determined using the following estimated useful lives. 

Freehold Building Over 50 years 

Freehold/Leasehold Refurbishment Over 10 years 

Office Equipment & Computers Over 05 years 

Furniture & Fittings Over 10 years 

2.4.9 Capital Work-In-Progress 

Capital work-in-progress is stated at cost. These are expenses of a capital nature directly incurred in the construction 

of buildings, major plant and machinery and system development, awaiting capitalisation. 

2.4.10 Borrowing Costs 

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset have 

been capitalised as part of the cost of the asset in accordance with the Sri Lanka Accounting Standard No. 20 on 

‘Borrowing Costs’. Capitalisation of borrowing costs ceases when substantially all the activities necessary to prepare 

the qualifying asset for its intended use are completed. 

2.5 Leasehold Property 

Leasehold properties are recorded at carrying value in terms of the Sri Lanka Accounting Standard No. 19 (Revised 

2005) on ‘Leases’. The carrying value of leasehold properties is amortised over the remaining lease term or useful life 

of leasehold property, whichever is lower. 

2.6 Intangible Assets 


An intangible asset is recognised if it is probable that the future economic benefits that are attributable to the asset 

will flow to the entity and the cost of the assets can be measured reliably. 


2.6.2 (a) Software 

Software represents the value of computer application software licensed for use of the Bank, other than software 

applied to the operation software system of computers. Intangible assets are carried at its cost, less accumulated 

amortization and any impairment losses. An intangible asset is recognised if it is probable that the future economic 

benefits that are attributable to the asset will flow to the entity and the cost of the assets can be measured reliably. 

104 


The initial costs comprise license fees paid at the time of purchase, duties/levies and also other directly attributable 

expenditure that are incurred in customising the software for its intended use. 

2.6.2 (b) Goodwill 

Goodwill arising on the acquisition represents the excess of the cost of acquisition over the Group’s interest in the net 

fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities at the date of acquisition. According 

to the revised Sri Lanka Accounting Standard No. 25 (Revised 2004) on ‘Business Combinations’, goodwill is no 

longer amortised. Instead, goodwill is tested for impairment annually and assessed for any indication of impairment at 

each reporting date to ensure that its carrying amount does not exceed its recoverable amount. If an impairment loss 

is identified, it will be recognised immediately in the Income Statement. The negative goodwill is recognised 

immediately in the Income Statement. 

2.6.3 Subsequent Expenditure 

Expenditure incurred on software is capitalized only when it enhances and extends the economic benefits of 

computer software beyond their original specifications and lives and such cost is recognized as capital improvement 

and added to the original cost of software. 

2.6.4 Amortisation 

Intangible assets except for goodwill are amortised using the straight-line method over the estimated useful life of five 

years commencing from the date the application software is available for use over the best estimate of its useful 

economic life. A periodic review is performed on intangible assets to confirm that there has been no impairment. 


Intangible assets are derecognised when it reveals that they will not generate economic benefits or circumstances 

indicate that the carrying value is impaired. Gains or losses arising from derecognition of an intangible asset are 

measured as the difference between the net disposal proceeds and the carrying amount of the assets, and are 

recognised in the Income Statement. 

2.7 Investment Properties 


Investment property is property that is held to earn rentals or for capital appreciation or both and the future economic 

benefits that are associated with the investment property but not for sale in the ordinary course of business. 


Investment property is accounted for under cost model in the Financial Statements. Accordingly, after recognition as 

an asset, the property is carried at its cost, less accumulated depreciation and impairment losses. 

2.7.3 Depreciation 

Depreciation is provided on a straight-line basis over the estimated life of the class of asset from the date of purchase 

up to the date of disposal. 


Investment properties are derecognised when disposed of, or permanently withdrawn from use because no future 

economic benefits are expected. Transfers are made to and from investment property only when there is a change in 

use. 

2.8 Impairment of Non-Financial Assets 

The carrying amounts of the Group’s assets are reviewed at each reporting date to determine whether there is 

objective evidence of impairment. If any such evidence exists, the carrying amount of a particular asset or portfolio of 

assets is reduced to the estimated recoverable amount by means of a charge to the Income Statement, in those 

expense categories consistent with the function of the impaired asset or portfolio of assets, except for property 

previously revalued where the revaluation was taken to equity. In this case, the impairment is also recognised in 

equity up to the amount of any previous revaluation. 

The recoverable amount of an asset is the higher of its net selling price and value in use. The net selling price is the 

fair value of an asset or cash-generating unit, less costs to sell. In determining the value in use, the estimated future 

cash flows are discounted to their present value using a pre-tax discount rate that reflects current market 

assessments of the time-value of money and the risk specific to the assets. Impairment losses recognised in respect 

of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cashgenerating 

unit and then, to reduce the carrying amount of the other assets in the unit. An assessment is made at 

each reporting date as to whether there is any indication that previously recognised impairment losses may no longer 


106 

exist or may have decreased. If such indication exists, the Bank makes an estimate of the recoverable amount. 

Previously recognised impairment losses other than in respect of goodwill are reversed only if there has been a 

change in the estimates used to determine the asset’s recoverable amount since the last impairment losses were 

recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. Such reversal 

is recognized in the Income Statement unless the asset is carried at the revalued amount, in which case, the reversal 

is treated as a revaluation increase. 

2.9 Securities purchased under Re-sale Agreements (Reverse Repos) 

Securities purchased under Re-sale Agreements are treated as collateralised lending and recorded at the 

consideration paid and interest accrued thereon. The amount lent is shown as an asset either as Loans and 

Advances to Customers or Loans to other Banks. The difference between purchase price and re-sale price is treated 

as interest received and accrued evenly over the life of Repo agreement. 

2.10 Government of Sri Lanka Treasury Bills, Bonds and other Securities 

2.10.1 Investments that are held for trading 

Investments in Treasury Bills and Treasury Bonds that are acquired for the purpose of short-term selling (held for 

trading) are marked to market and carried at that value in the Balance Sheet. Gains and losses on mark to market 

valuation are dealt with through the Income Statement. 

2.10.2 Long-Term Investments that are held to maturity 

Investments in Treasury Bills and Treasury Bonds that the Bank intends and is able to hold to maturity are reflected 

at the value of the Bonds/ Bills purchased and the discount/ premium accrued thereon. Discounts received/premium 

paid are taken to the Income Statement based on a pattern reflecting a constant periodic rate of return. 

3. Liabilities and Provisions 

3.1 Deposits from Customers 

Deposits from customers include non-interest bearing deposits, savings deposits, term deposits, 7 days’ call deposits 

and certificate of deposits. They are stated in the Balance Sheet at amounts payable. Interest paid/payable on these 

deposits is charged to the Income Statement. 

3.2 Borrowed Funds 

Borrowed funds include call money borrowings, refinance borrowings and other term borrowings from banks. They 

too are stated in the Balance Sheet at amounts payable. Interest paid/payable on these borrowings is charged to the 

Income Statement. 

3.3 Securities sold under Re-purchase Agreements (Repos) 

Securities sold under repurchase agreements (‘Repos’) are treated as collateralised borrowings and stated at the 

consideration received and interest accrued thereon. These are retained in the Financial Statements and the counterparty 

liability is accounted for as a liability and classified under debt securities in issue. The difference between sale 

and repurchase price is treated as interest paid and accrued evenly over the life of the Repo period. 

3.4 Defined Benefit Plans 

3.4.1 Bank of Ceylon Pension Trust Fund 

The ‘Bank of Ceylon Pension Trust Fund’ is a funded, non-contributory, defined retirement benefit plan, operated for 

the payment of pensions until death to the permanent employees who have completed a minimum of ten years of 

continuous service with the Bank, at their retirement on reaching the retirement age on or after 55 years or on 

medical grounds,before reaching retirement age. The pension is computed as a percentage of the last drawn salary 

excluding certain allowances. 

Contributions to the Pension Trust Fund are made monthly, based on the advice of a qualified actuary, currently at 

56.76% of gross salary for employees who joined the Bank prior to 01 January 1996. Employees who joined the Bank 

on and after 01 January 1996 may contribute 20% of their gross salary to a Pension Fund in which event the 

BankContributes 5%. This arrangement is tentatively pending until the formulation of a contributory pension scheme 

is finalised. The Subsidiaries do not operate Pension Funds. 

3.4.2 Bank of Ceylon Widows’/Widowers’ and Orphans’ Pension Fund 

The Bank is liable for and guarantees the payments to the beneficiaries of the ‘Bank of Ceylon Widows’/ Widowers’ 

and Orphans’ Pension Fund’ to which the Bank’s employees monthly contribute 8% of their gross salary. The Bank’s 

liability towards the beneficiaries of the employees arises when an employee who has contributed to the fund for 


fivecontinuous years dies while in service or on the death of a pensioner where the Bank will be liable to pay a 

monthly Widows’/Widowers’ and Orphans’ Pension to his/her beneficiaries. The pension to beneficiaries of an 

employee who dies while in service is based on the last drawn salary excluding certain allowances. The fund is 

actuarially valued by a qualified actuary once in three years and the deficit is bridged piece meal. Bridging of full 

deficit is currently under evaluation. This would be done in consultation with the Actuary, Trustees and Beneficiaries. 

Currently, the Bank contributes a sum of Rs. 456 million per annum to meet the deficit as recommended by the 

Actuary. Both the Pension Fund and the Widows’/Widowers’ and Orphans’ Pension Fund are approved by the 

Government and are independently administered. 

3.4.3 Provision for Gratuity 

Provision has not been made in the Financial Statements for retirement gratuity payable under the Payment of 

Gratuity Act No. 12 of 1983, to employees who joined the Bank prior to 1 January 1996 as the Bank has its own noncontributory 

retirement benefit scheme in force. However, employees whose services are terminated other than by 

retirement are eligible to receive a terminal gratuity under the Payment of Gratuity Act No. 12 of 1983, at the rate of 

one-half of the basic or consolidated wage or salary, cost of living and all other allowances applicable to the last 

month of the financial year, for each year of continuous service. A provision is being made in these Financial 

Statements for retirement gratuities from the first year of service for all employees who joined the Bank on or after 01 

January 1996, as they are not covered by the pension scheme of the Bank. In terms of the Sri Lanka Accounting 

Standard No. 16 (Revised 2006) on ‘Employee Benefits’, the Bank and its Subsidiaries have calculated the postemployment 

benefit obligations based on the actuarial valuation method recommended in SLAS 16 and recognised 

that provision in the Income Statement. The Gratuity Liabilities are not externally funded. 

3.5 Defined Contribution Plans 

Contributions to defined contribution plans are recognised as an expense in the Income Statement as incurred. 

3.5.1 Bank of Ceylon Provident Fund 

All employees of the Bank are members of the ‘Bank of Ceylon Provident Fund’ to which the Bank contributes 12% of 

employees’ monthly gross salary excluding overtime while employees contribute 8%. The Bank’s Provident Fund is 

an approved Fund, which is independently administered. 

3.5.2 Employees’ Provident Fund 

The Subsidiaries and their employees (other than Bank of Ceylon and its employees) contribute at the rate ranging 

from 12% to 15% and 8% to 10% respectively on salary of each employee to the Employees’ Provident Fund, in 

terms of the 

Employees’ Provident Fund Act No. 15 of 1958 as amended. 

3.5.3 Employees’ Trust Fund 

All employees of the Bank and its Subsidiaries are members of the Employees’ Trust Fund to which Bank/Group 

contributes 3% of employees’ monthly gross salary excluding overtime, in terms of the Employees’ Trust Fund Act 

No. 46 of 1980. 

3.6 Provisions for Liabilities 

A provision is recognised in the Balance Sheet when the Bank has a legal or constructive obligation as a result of a 

past event, and it is probable that an outflow of economic benefits will be required to settle the obligations, in 

accordance with the Sri Lanka Accounting Standard No. 36 on ‘Provisions, Contingent Liabilities and Contingent 

Assets’. 

4. Income Statement 

4.1 Revenue Recognition - Bank and Non-Insurance Business 

4.1.1 Interest Income from Loans and Advances 

Interest income from loans and advances is recognised on an accrual basis. Interest ceases to be accrued when the 

recovery of principal or interest is in arrears for more than 90 days. Interest income from non-performing loans and 

advances is accounted for on cash basis. Interest falling due on non-performing loans and advances is credited to 

interest in suspense account on memorandum basis. In addition, interest accrued up to three months on such nonperforming 

loans and advances is also eliminated from the interest income and transferred to interest in suspense. 

4.1.2 Lease Income 

Lease income is the interest component of the lease rentals of all finance leases receivable during the year. The 

excess to the aggregate rental receivable over the cost of the leased assets constitutes unearned income, which is 

taken into revenue over the term of the lease, from the month in which the lease is executed, in proportion to the 


108 

remaining receivable balance of the lease. Interests on finance leases cease to be accrued when they are in arrears 

for more than 90 days. Thereafter, such income is recognised on cash basis. 

4.1.3 Interest Income from Other Sources 

Interest income from Government or Central Bank of Sri Lanka securities is recognised on a time proportionate basis 

as premium/discounts on purchase and amortised to income on a straight-line basis over the period to maturity. 

Income from all other interest-bearing securities is recognised on an accrual basis. 

4.1.4 Commission and Fee Income 

Commission and fee income mainly comprise fees receivable from customers for guarantees and other services 

provided by the Bank, and fees for foreign and domestic payment tariff. Such income is recognised as revenue at the 

time the services are provided. Income on the endorsement of bills of exchange is recognised only when the bill is 

received and either issued or endorsed, and the payment under the particular instrument has been effected. 

4.1.5 Dividend Income 

Dividend income is recognised when the right to receive payment is established. 

4.1.6 Profit/(Loss) from Sale of Property, Plant & Equipment 

Profit/loss arising from sale of property, plant & equipment is recognised in the period in which the sale occurs and is 

classified as other income. 

4.1.7 Gains or Losses arising from Investment Securities 

Gains or losses arising from the sale of equity shares, units, and financial instruments, including Treasury Bills sold 

prior to maturity, are accounted for on the date on which the transaction takes place. 

4.1.8 Interest Expenses 

Interest expenses are recognised on accrual basis. 

4.1.9 Operating Expenses 

All the expenses payable are recognised on accrual basis in the Income Statement to the period to which they relate. 

4.2 Non-Life Insurance Business 

4.2.1 Gross Written Premiums 

Upon inspection of the contract, premiums are recorded as written and are earned primarily on a pro rata basis over 

the term of the related policy coverage. However, for those contracts for which the period of risk differs significantly 

from the contract period, premiums are earned over the period of risk in proportion to the amount of insurance 

protection provided. 

4.2.2 Reinsurance Premium 

Premiums ceded to reinsure are recognized as an expense in accordance with the pattern of reinsurance services 

received. Reinsurance premiums are decided based on rates agreed with reinsurers. 

4.2.3 Unearned Premium 

The unearned premium reserve represents the portion of the premiums and outward reinsurance premiums written in 

the current year in respect of risks related to subsequent periods. Unearned premiums are calculated on the 1/24th 

basis in accordance with the Regulation of Insurance Industry Act No. 43 of 2000. 

4.2.4 Unexpired Risk 

Provision is made where appropriate for the estimated amount required over and above unearned premiums to meet 

future claims and related expenses on the business in force as at end of the year. 

4.2.5 Net Deferred Acquisition Expenses 

Acquisition expenses, representing commissions, which vary with and directly related to the production of business, 

are deferred and amortised over the period in which the related written premiums are earned. Reinsurance 

commission is also treated in the same manner within deferred acquisition costs. 


4.2.6 Premium Receivable 

According to the Premium Payment Warranty (PPW) ruling by the Insurance Board of Sri Lanka (IBSL), all policies 

issued and not recovered over 60 days are cancelled. 

4.2.7 Reinsurance Receivable 

Reinsurance assets include the balances due from both insurance and reinsurance companies for paid and unpaid 

losses and loss adjustment expenses. Amounts recoverable from reinsurers are estimated in a manner consistent 

with the claim liability associated with the reinsured policy. Reinsurance is recorded gross in the Balance Sheet 

unless a right to offset exists. If a reinsurance asset is impaired, the company reduces the carrying amount 

accordingly and recognises a loss in the statement of income. A reinsurance asset is impaired if there is objective 

evidence, as a result of an event that occurred after the initial recognition of the reinsurance asset, that the company 

may not receive amounts due to it 

under the terms of their contract, and the event has a reliably measurable impact on the amount that the company 

will receive from the reinsurer. 

4.2.8 Claims 

Claims incurred include provisions for the estimated cost of claims and related handling expenses in respect of 

incidents up to the year end, including those which had not been notified, net of salvage, anticipated reinsurance and 

other recoveries. Claims outstanding are assessed by review of individual claim files and estimating changes in the 

ultimate cost of settling claims. The provision in respect of claims Incurred But Not Reported (IBNR) is actuarially 

valued to ensure a more realistic estimation of the future liability based on the past experience and trends. Actuarial 

valuations are performed on an annual basis. Whilst the Directors consider that the provision for claims are fairly 

stated on the basis of information currently available, the ultimate liability will vary as a result of subsequent 

information and events. This may result in adjustments to the amounts provided. Such amounts are reflected in the 

Financial Statements for that period. The methods used and the estimates made are reviewed regularly. 

4.3 Life Insurance Business 

4.3.1 Gross Written Premiums 

Premiums from traditional life insurance contracts, including participating contracts and annuity policies with life 

contingencies, are recognised as revenue when cash is received from the policyholder. Benefits and expenses are 

provided against such revenue to recognise profits over the estimated life of the policies. 

4.3.2 Reinsurance Premium 

Outward reinsurance premiums are recognized when payable. Reinsurance recoveries are credited to match the 

relevant gross claims. 

4.3.3 Benefits, Losses and Expenses 

Expenses on the life insurance revenue account relate to the acquisition and maintenance of life insurance business 

and include investment expenses not treated as a part of the capital cost of investment. Claims by death and maturity 

are charged against revenue on notification of death or on expiry of the term. The interim payments and surrenders 

are accounted for only at the time of settlement. 

4.3.4 Actuarial Valuation for Long-Term Insurance Provision 

The Directors agree to the long-term insurance provision for the Company at the year end on the recommendations 

of the Consultant Actuary following his annual investigation of the life insurance business. The actuarial valuation 

takes into account all liabilities and is based on assumptions recommended by the Consultant Actuary. 

5. Commitments and Contingencies 

Contingent liabilities are the possible obligations whose existence will be confirmed only by uncertain future events or 

present obligations where the transfer of economic benefit is not probable or cannot be reliably measured. Contingent 

liabilities are not recognised in the Balance Sheet but are disclosed, unless they are remote. 

6. Segmental Reporting 

Segmental information is presented in respect of the Group’s business. 

Business segments provide products and services whose risks and returns are different from those of other 

business segments. These segments comprise banking, leasing, treasury and investment, property and insurance. 

Geographical segments provide products or services within a particular economic environment where risks and 

returns are different from those of other economic environments. These segments comprise domestic, off-shore 

banking units (branches) and off-shore banking division. 


110 

7. Cash Flow and Cash and Cash Equivalents 

The cash flow has been prepared by using the ‘Direct Method’. Cash and cash equivalents comprise cash, amounts 

due from other banks and other short-term highly liquid investments with less than 90 days’ maturity from date of 

acquisition. 

8. Comparative Figures 

Where necessary, amounts shown for the previous year have been reclassified to facilitate comparison. 

9. Events After the Balance Sheet Date 

Where necessary, all the material events after the Balance Sheet date have been considered and appropriate 

adjustments/disclosures have been made in the Financial Statements. 

10. Directors’ Responsibility Statement 

The Board of Directors takes the responsibility for the preparation and presentation of these Financial Statements. 

11. New Accounting Standards Issued but Not Effective as at the Balance Sheet Date 

Sri Lanka Accounting Standard No. 44 on Financial Instruments: Presentation and Sri Lanka Accounting Standard 

No. 45 on ‘Financial Instruments’: Recognition and Measurement which are applicable to the Financial Statements 

covering annual periods beginning on or after 01 January 2011, and not yet effective for the period ended December 

2009, have not been applied in preparing these consolidated Financial Statements. These two standards together 

provide comprehensive guidance on identification, classification, measurements (including Derivatives) into financial 

assets, financial liabilities and equity instruments. In order to comply with the requirements of these standards, Bank 

of Ceylon is in the process of assessing the effect of adoption of the aforesaid two standards. Due to the complex 

nature of the effects of these standards, the impact of adoption cannot be estimated as at the date of publication of 

these Financial statements. 

There have been no significant changes in the nature of principal activities of Subsidiaries during the year under 

review other than for engaging in insurance business through acquisition of and insurance company to the Group 

during the year. 


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