NATIONAL DEVELOPMENT BANK OF SRI LANKA Act

Arrangement of Sections

1. Short title.

PART I

Constitution and Powers of the National Development Bank of Sri Lanka and its Board of Directors

2. Establishment of the National Development Bank of Sri Lanka.

3. Bank to be a body corporate.

4. Head office and branch offices of the Bank.

5. Purposes of the Bank.

6. Powers of the Bank in carrying out its purposes.

7. Special powers of the Bank in relation to officers, delegations, contracts.

8. Board of Directors.

8A. Nominated Directors.

8B. Elected Directors.

8C. The First Board of Directors.

9. Powers, functions of the Board of Directors.

10. Remuneration of Directors.

11. Director to disclose interest in contracts proposed to be made by the Bank.

12. Meetings of the Board of Directors quorum and regulation of procedure.

13. Delegation of powers and duties of the Board of Directors.

14. Board of Directors may act despite a vacancy or defect.

15. Chairman of the Board of Directors.

16. Seal of the Bank.

17. Agency.

18. Appointment of Special Committees.

19. Remuneration of members of special committees.

20. Commencement of business.

PART II

Finance

21. Capital of the Bank.

22. Contributions to the capital of the Bank.

23. Liability of shareholders.

24. General borrowing powers of the Bank.

25. Borrowing from the Government.

26. Temporary borrowings from the Central Bank and licensed commercial Banks.

27. Borrowing from foreign Governments.

28. National Development Bank Debentures and Stock.

29. Government to guarantee repayments.

30. Government guarantee on foreign borrowings.

31. Administered Resources Fund.

32. Funds of the Bank.

33. Utilisation of the profits of the Bank.

34. Exemption of Bank from income tax.

35. Registered address of borrower.

36. Repealed.

37. Default of payment.

38. Action by Board of where default is made.

39. Authorisation of manager to take possession of mortgaged property.

40. Procedure where manager is appointed.

41. Authorisation of sale of mortgaged property.

42. Where borrower is dead.

43. Notice of resolution of Board of Directors to sell mortgaged property.

44. Notice of sale.

45. Payment before sale.

46. Upset price.

47. Default in respect of one of several loans on same property.

48. Recovery of expenses and costs incurred by the Bank.

49. Payment of excess balance.

50. Certificate of sale.

51. Order for delivery of possession.

52. Cancellation of sale.

53. Re-sale by the Bank.

PART III

Audit and Accounts

54. Financial year of the Bank.

55. Audit.

56. Documents to be transmitted to the Minister to be laid before Parliament.

PART IV

[Repealed]

[Ss 57–64.]

PART V

General

65. Certain written laws not to apply to the Bank.

66. The Bank deemed to be a credit institution.

66A. Bank deemed to be a Bank within the meaning of the Evidence Ordinance.

66B. Annual General Meeting.

67. Officers of the Bank to furnish security.

68. No liability for damage or loss caused otherwise than by misconduct or willful default.

69. Declaration of secrecy.

70. Right to refuse to answer questions.

71. Receipts when valid.

72. Contracts.

73. Bills of exchange and promissory notes.

74. Persons authorised to act on behalf of the Bank.

75. Execution of deeds abroad.

76. Rules.

77. Offences.

78. Special provisions relating to the shareholders.

79. Repealed.

80. Interpretation.

SCHEDULE

2 of 1979,

10 of 1990,

10 of 1992,

34 of 1999,

1 of 2005.

AN ACT to provide for the establishment of the National Development Bank of Sri Lanka, and for matters connected therewith or incidental thereto.

[Date of Commencement: 24th January, 1979]

1. Short title.

This Act may be cited as the National Development Bank of Sri Lanka Act.

PART I

Constitution and Powers of the National Development Bank of Sri Lanka and its Board of Directors

2. Establishment of the National Development Bank of Sri Lanka.

There shall, on the appointed date or as soon as may be thereafter, be established a Bank which shall be called the "National Development Bank of Sri Lanka”, hereinafter referred to as "the Bank”, and which shall consist of the persons who are for the time being shareholders of the Bank.

3. Bank to be a body corporate.

The Bank shall by the name assigned to it by section 2 be a body corporate and shall have perpetual succession and a common seal and may sue and be sued in such name.

4. Head office and branch offices of the Bank.

The head office of the Bank shall be in Colombo. Such branch offices of the Bank as the Board of Directors may consider necessary may be established in places in Sri Lanka, other than in Colombo.

5. Purposes of the Bank.

(1) The purposes of the Bank shall be to promote the industrial, agricultural, commercial and other development of the economy of Sri Lanka having regard inter alia to the development of the rural sector, in accordance with the provisions of this Act—

(a) by providing credit and other forms of assistance to industrial, agricultural, commercial and other enterprises;

[S 5(1)(a) am by s 2 of Act 10 of 1992.]

(b) by stimulating the further development of the investment, share and security markets of Sri Lanka;

(c) by mobilising internal and external capital for investment in industrial, agricultural, commercial and other enterprises; and

(d) by engaging in the promotion of the industrial, agricultural, commercial and other development of the economy of Sri Lanka.

(2) In carrying out its purposes, the Bank shall whenever it is feasible and desirable act in participation or cooperation with approved credit institutions.

6. Powers of the Bank in carrying out its purposes.

Subject to the other provisions of this Act, in carrying out its purposes the Bank may exercise all or any of the following powers—

(a) grant loans and advances with or without security to any enterprises or about to engage in industry, agriculture or commerce;

[S 6(a) am by s 3 of Act 10 of 1992.]

(b) to guarantee loans raised or to be raised by industrial, agricultural and commercial enterprises from approved credit institutions;

(bb) to grant loans and advances to any individual—

(i) for the purchase or lease of any land for the construction of a dwelling house;

(ii) for the construction, repair, renovation or extension of a dwelling house;

(iii) for the purchase or lease of a dwelling house;

(iv) for any purpose incidental, accessory or ancillary to any of the purposes mentioned in subparagraph (i), (ii) or (iii); or

(v) for the liquidating of any debt already incurred for any purpose mentioned in subparagraph (i), (ii), (iii) or (iv).

[S 6(bb) ins by s 2 of Act 34 of 1999.]

(c) to guarantee obligations of financial institutions arising out of the underwriting of capital issues of industrial, agricultural and commercial enterprises;

(d) to participate in the equity of industrial, agricultural and commercial enterprises, and to subscribe to, or to purchase or underwrite, the issue of stocks, shares, bonds or debentures of any such enterprises, and to sell and deal in such securities;

(e) to grant loans and advances by way of re-finance of any loans or advances granted by approved credit institutions, and other institutions approved by the Bank to industrial, agricultural and commercial enterprises, and for that purpose to fix the minimum and maximum periods of maturity of loans granted by such Banks and institutions;

(f) to provide such services as technical and administrative advice and assistance which serves its purposes and comes within its functions to industrial, agricultural and commercial enterprises;

(g) to incur, during the first five years after the commencement of its business, expenditure up to an amount not exceeding two per centum of its paid-up capital in furnishing the services referred to in paragraph (f) on a non-reimbursable basis, and thereafter to charge to the funds of the Bank with the expenditure incurred in continuing to provide such services where necessary on a non-reimbursable basis;

(h) to establish subsidiary companies to assist it in carrying out its purposes and exercising and performing its powers and duties;

(i) to promote the establishment of industrial, agricultural, commercial and other enterprises;

(j) to acquire or purchase any movable or immovable property, or any industrial, agricultural, commercial or other enterprise, and to manage or arrange for the management of such property or enterprise, and to sell or otherwise dispose of such property or enterprise;

(k) to invest temporarily the funds of the Bank in foreign securities;

(kk) to undertake and execute any trusts the undertaking whereof may seem desirable;

[S 6(kk) ins by s 3 of Act 10 of 1992.]

(l) to participate in loans, equities, underwriting arrangements and guarantees with approved credit institutions;

(m) subject to such conditions as may be determined by the Board of Directors, to accept, discount, rediscount, buy, sell and deal in bills of exchange, promissory notes, coupons, drafts, debentures, certificates, scrip and other instruments and securities whether transferable or negotiable or not, of industrial, agricultural and commercial enterprises;

(n) to undertake development projects, including pilot projects, in order to achieve the purposes of the Bank;

(o) to engage in the construction of warehouses, godowns, stores and buildings required for agricultural, industrial and commercial activities;

(p) to lease, let on hire, sell outright, or sell on a hire-purchase basis warehouses, godowns, stores and buildings, machinery, equipment and other goods;

(q) to guarantee loans raised by any industrial, agricultural or commercial enterprise, being loans which are floated in the open market;

(r) to guarantee deferred payments due from any industrial, agricultural or commercial enterprise;

(s) to convert a part or whole of its loans to industrial, agricultural or commercial enterprises, and its subscriptions to bonds or debentures issued by any such enterprise into equity capital;

(t) to subscribe to, or to purchase, or to underwrite the issue of, stocks, shares, bonds or debentures of approved credit institutions;

(u) to receive, in consideration of the functions the Bank may be performing, such commission, brokerage, interest, remuneration or fees, as the Board of Directors may, from time to time, determine;

(v) to open deposit accounts in the Central Bank, any commercial Bank, or any Bank or financial institution outside Sri Lanka;

(w) to accept term deposits from any person in such amounts and for such periods as may be determined by the Board of Directors;

(x) to grant and issue letters of credit and circular notes;

(y) to buy, sell and deal in bullion and specie and engage in operations in exchange; and

(z) generally to do, directly or indirectly, all such acts or things as may be connected with, or are in furtherance of, the exercise, discharge or performance of the powers, functions or duties of the Bank under this Act or any other law.

7. Special powers of the Bank in relation to officers, delegations, contracts.

The Bank may exercise all or any of the following powers—

(a) to appoint a General Manager who shall be the chief executive officer of the Bank;

(b) to appoint such other officers and servants as may be necessary for carrying out the work of the Bank;

(c) to establish a provident fund and a pensions fund or scheme for the benefit of its officers and servants, and to make contributions to such fund or scheme and provide welfare and recreational facilities, houses, hostels and other like accommodation for persons employed by the Bank;

[S 7(c) am by s 4 of Act 10 of 1992.]

(d) to enter into and perform all such contracts, whether in or outside Sri Lanka, as may be necessary for the exercise of the powers and the performance of the duties of the Bank;

(e) to make rules in relation to its officers and servants, including their appointment, promotion, remuneration, disciplinary control, conduct and the grant of leave to them;

(f) to make rules in respect of the administration of the affairs of the Bank; and

(g) to do all other things which, in the opinion of the Board of Directors, are necessary to facilitate the proper carrying on of the business of the Bank.

8. Board of Directors.

(1) The Bank shall have a Board of Directors of not less than five and not more than ten members consisting of both nominated and elected directors nominated or elected, as the case may be, under section 8A or 8B.

(2) The General Manager shall be an ex-officio member of the Board of Directors without the right to vote at any meeting of such Board of Directors.

[S 8 subs by s 5 of Act 10 of 1992.]

8A. Nominated directors.

(1) The Minister shall nominate as members of the Board of Directors—

(a) three persons, one of whom shall be a senior officer of the Central Bank where the Government of Sri Lanka or the Central Bank or both parties together holds or hold twenty five per-centum or more of the issued share capital of the Bank; or

(b) two persons, one of whom shall be a senior officer of the Central Bank where the Government of Sri Lanka or the Central Bank or both parties together holds or hold less than twenty-five per centum of the issued share capital of the Bank.

A person nominated as a director under this subsection is hereinafter referred to as a "Nominated Director”.

(2) A nominated director shall hold office for a term of four years:

Provided however, where the percentage of shares held by the Government of Sri Lanka or the Central Bank or both parties together, is reduced after the nomination of such directors under subsection (1), to such an extent as would require an increase in the number of elected directors, the Minister shall request one or two, as the case may be, of nominated directors to resign from office and where such director or directors, as the case may be, fails or fail to resign from office, remove such director or directors from office.

(3) The Minister may without assigning any reason therefor remove a nominated director from office.

(4) A nominated director may resign his office by a letter in that behalf addressed to the Minister.

(5) If a nominated director is temporarily unable to perform the duties of his office by reason of ill-health or other infirmity or absence from Sri Lanka, the Minister may nominate another person to act as his alternate at Board meetings and the person so nominated shall have a right to vote at such meetings.

(6) In the event of the vacation of office by death, resignation or removal of a nominated director, otherwise than by resignation or removal under the proviso to subsection (2) the Minister shall nominate another person to fill such vacancy. The person so nominated shall hold office for the unexpired period of office of the member whom he succeeds.

[S 8A ins by s 6 of Act 10 of 1992.]

8B. Elected directors.

(1) The elected Directors of the Board shall be elected by the shareholders of the Bank (other than the Government of Sri Lanka and the Central Bank) at every Annual General Meeting of the shareholders of the Bank, on the basis of one member for every such ten per centum of the total issued share capital of the Bank as is owned by persons other than the Government of Sri Lanka and the Central Bank so however, that the number of the directors so elected shall not exceed the difference between the maximum number of directors of the Board of Directors specified under section 8 and the number of directors that may be nominated by the Minister under section 8A.

Example—

If the percentage of the total issued share capital of the Bank owned by shareholders (other than Government and the Central Bank) is forty per centum, such shareholders shall be entitled to elect four members.

(2) The shareholders of the Bank (other than the Government of Sri Lanka and the Central Bank) may, at a meeting of such shareholders convened by the Chairman at the request of five or more of such shareholders remove an elected director from office and elect another director in his place.

(3) An elected director may resign his office by letter addressed to the Chairman in that behalf.

(4) Where an elected director is temporarily unable to perform the duties of his office by reason of ill-health or other infirmity or absence from Sri Lanka, such director with the concurrence of the Board of Directors may appoint another person to act as his alternate at Board meetings and the person so appointed shall have a right to vote at such meetings.

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SRI LANKA SUSTAINABLE DEVELOPMENT ACT, NO. 19 OF 2017


MUNICIPAL COUNCILS (AMENDMENT) ACT, NO. 20 OF 2017


URBAN COUNCILS (AMENDMENT) ACT, NO. 21 OF 2017


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MUNICIPAL COUNCILS (AMENDMENT) ACT, NO. 20 OF 2017


URBAN COUNCILS (AMENDMENT) ACT, NO. 21 OF 2017


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IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


SRI LANKA SUSTAINABLE DEVELOPMENT ACT, NO. 19 OF 2017


MUNICIPAL COUNCILS (AMENDMENT) ACT, NO. 20 OF 2017


URBAN COUNCILS (AMENDMENT) ACT, NO. 21 OF 2017


REGULATION OF INSURANCE INDUSTRY(AMENDMENT) ACT, NO. 23 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


SRI LANKA SUSTAINABLE DEVELOPMENT ACT, NO. 19 OF 2017


MUNICIPAL COUNCILS (AMENDMENT) ACT, NO. 20 OF 2017


URBAN COUNCILS (AMENDMENT) ACT, NO. 21 OF 2017


REGULATION OF INSURANCE INDUSTRY(AMENDMENT) ACT, NO. 23 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


SRI LANKA SUSTAINABLE DEVELOPMENT ACT, NO. 19 OF 2017


MUNICIPAL COUNCILS (AMENDMENT) ACT, NO. 20 OF 2017


URBAN COUNCILS (AMENDMENT) ACT, NO. 21 OF 2017


REGULATION OF INSURANCE INDUSTRY(AMENDMENT) ACT, NO. 23 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


SRI LANKA SUSTAINABLE DEVELOPMENT ACT, NO. 19 OF 2017


MUNICIPAL COUNCILS (AMENDMENT) ACT, NO. 20 OF 2017


URBAN COUNCILS (AMENDMENT) ACT, NO. 21 OF 2017


REGULATION OF INSURANCE INDUSTRY(AMENDMENT) ACT, NO. 23 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


SRI LANKA SUSTAINABLE DEVELOPMENT ACT, NO. 19 OF 2017


MUNICIPAL COUNCILS (AMENDMENT) ACT, NO. 20 OF 2017


URBAN COUNCILS (AMENDMENT) ACT, NO. 21 OF 2017


REGULATION OF INSURANCE INDUSTRY(AMENDMENT) ACT, NO. 23 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


SRI LANKA SUSTAINABLE DEVELOPMENT ACT, NO. 19 OF 2017


MUNICIPAL COUNCILS (AMENDMENT) ACT, NO. 20 OF 2017


URBAN COUNCILS (AMENDMENT) ACT, NO. 21 OF 2017


REGULATION OF INSURANCE INDUSTRY(AMENDMENT) ACT, NO. 23 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


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