1 FinalChapter 1- Introduction After SW Perusal

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CHAPTER ONE

INTRODUCTION1.0 General

This chapter discusses the development banks in and financial services sector and its

relationship with the role of information. The description pays attention to the

information usage in banking and development banking industry in Sri Lanka too. It sets

the context for the research on the assessment of the information needs of DFCC Bank

managers. The study also aims to determine the information behavior of the managers of

the DFCC Bank. For the purpose of acknowledging the sources used in this study, the

Harvard System of Referencing was employed.

1.2 Socio Economic Situation of Sri Lanka

Sri Lanka is a developing country in South Asia. Its open economy, climate, high literacy

and willingness of many unemployed to become entrepreneurs, creates a situation apt for

investment. These factors highlight the opportunities that the country has for

development. Banks as part of financial services sector in Sri Lanka contributes

immensely for country’s development.

1.3 Banking

In the present world money plays an important role in order to fulfill the principle needs

of the people and national and international development. Banking has become a

competitive industry which contributes to the fulfillment of the above needs.

Banking predated the invention of money. Discussing, counting, sorting, recording, and

lending in the simplest manner were involved with banking in the ancient times.

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According to the Dictionary of Banking by Jain (2008) Banking is “In general terms, the

business activity of accepting and safeguarding money owned by other individuals and

entities, and then lending out this money in order to earn a profit.” (p.63)

Bank customers can be divided into 2 basic categories as internal and external customers.

Some of the basic principles common to almost all banking systems globally are the

principles of intermediation, liquidity, profitability, trust, and solvency (Indian Institute

of Banking and Finance, 2005).These principles are fundamental to the development of a

bank and its sustenance. For the prevalence of above principles, the productive

performance of the internal customers and their positive relationships with the external

environment are a necessity.

1.3.1Banking in Sri Lanka

Banking in Sri Lanka has rapidly expanded in the last two to three decades especially

with the economic development. The products and services of the banks have grown

with the increase in the demands for bank services by the customers. Banking has

become a sophisticated sector in a real competitive environment. It has spreaded to rural

areas contributing immensely to healthy socio economic development of the country

The Central Bank of Sri Lanka functions as the apex financial institution of the financial

system of Sri Lanka. The regulation and the supervision of banking institutions is

mainly done by the Monetary Law Act No. 58 of 1949, the Banking Act No. 30 of 1988

and the Exchange Control Act No.24 of 1953 ( Central Bank of Sri Lanka, 2009)

Sri Lanka comprises of 22 licensed commercial banks (LCB) and 14 licensed

specialized banks (LSB) (Central Bank of Sri Lanka, 2009). LCBs could be categorized

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as locally incorporated banks and local branches of foreign banks, maintaining current

accounts, savings deposits and time deposits for customers. They provide various other

financial services as well. LSBs consist of development banks, savings banks and

regional development banks. The national level banks of the LSBs mainly carry out

long-term lending for development projects and regional development banks engage in

medium-term and short-term lending (Central Bank of Sri Lanka, 2004).

Banking is a vital component in the financial sector. In Sri Lanka too it has become a

major driver of the national economy. Banking has become an essential feature in

peoples’ lives as it helps the society at large offering various products and services and

support services. Products and services cover various lending, savings and other

schemes such as housing loans, construction loans and real estates. Supports services

involve, instructing and advisory service on such loans as wealth management,

feasibility reports provision, advising on project diversification. Banking support is also

given to development projects, Small and Medium Enterprises, micro entrepreneurship

and many more. In such an endeavour the bankers awareness of these activities is

foremost important. And their usage of information and information seeking behavior

are major aspects of discussion.

1.4 Development Banks

A development bank or development finance institution (DFI) carry out long-term

financing, principally, by way of long-term loans for development project financing. A

development bank differs from other financing institutions such as commercial and

investment banks due to two of its main policies which are closely linked with the

approval of a loan for the purpose of financing of a project. These are an economic

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appraisal of a project and funding of a project only if there is no other realistic and

sensible source of finance for it (ADFIAP, 2001).

Almost all developing countries and some industrial countries have development banks.

Some of these development banks are government-owned or public and some are private,

while there are mixed ownership institutes as well (ADFIAP, 2001).

The main functions and the main objectives of the development banks in general could be

considered as the financing of development projects, promotion of development projects,

long-term financing and capital market development, functioning as a financial agents

and catalysts and technical assistance functions (ADFIAP, 2001).

Development banks, like any other institution, face several challenges such as a

competitive environment, economic stability locally and globally. The bank should have

policies which would support its financial viability. Moreover, positive organizational

communication patterns, maximizing the productivity of the human resources, identifying

the essential and latest developments in the internal and external environment in order to

respond to the challenging issues are essential.

1.4.1Development Banks in Sri Lanka

While, development banks of Sri Lanka belong to the category of licensed specialized

banks (LSB), they, like other banks in Sri Lanka, comes under Central Bank regulations.

Regularly, development banks provide information related to their operations to the Bank

Supervision Department of the Central Bank of Sri Lanka. According to the information

provided, the Bank Supervision Department monitors the financial conditions of a

particular bank. It is necessary that development banks publish their quarterly and annual

audit financial statements in the newspapers, in Sinhala, Tamil and English. The Chief

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Executive Officers of the development banks attend the monthly common banking forum

which is held by the Governor of the Central Bank. They share and exchange their ideas

and opinions of the issues and the policies concerning banking operations and financial

sector (Central Bank of Sri Lanka, 2008).

The names of the development banks of Sri Lanka are as follows:

• DFCC bank

• Housing Development Finance Corporation Bank of Sri Lanka (HDFC)

• Lankaputhra Development Bank Ltd.

• Sanasa Development Bank Ltd.

• Kandurata Development Bank

• Rajarata Development Bank

• Ruhuna Development Bank

• Sabaragamuwa Development Bank

• Uva Development Bank

• Wayamba Development Bank

(Central Bank of Sri Lanka, 2008)

The Regional Development Department of the Central Bank, on behalf of the

Government of Sri Lanka, has implemented donor and government funded lending

programs in the regions of Sri Lanka. These would contribute to the economic growth of

the country. The development banks, other LSBs, all the LCBs, all registered leasing

companies and all registered finance companies of Sri Lanka and also the Seylan

Merchant Bank which is not licensed by the Central Bank of Sri Lanka are considered as

the Participating Financial Institutions (PFI).

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These lending programs are indicated below

Agricultural Sector

• Second Perennial Crops Development Project Revolving Fund Loan Scheme

(SPCDPRF)

• Tea Development Project Revolving Fund Loan Scheme (TDPRF)

• New Comprehensive Rural Credit Scheme (NCRCS)

Small and Medium Enterprise Sector

• Matale Regional Economic Advancement Project (MREAP)

• Small Business Revival Project (SBRP)

• Susahana Loan Scheme

• Sabaragamuwa Province Integrated Rural Development Project Revolving Fund

Loan Scheme (SPIRDPRF)

• European Investment Bank (EIB)-Post Tsunami Line of Credit – (Contract B)

• Construction Sector Development Project

Micro Finance Sector

•Dry Zone Livelihood Support Partnership Programme

• Small Holder Plantation Entrepreneurship Development Programme

• Small Farmers and the Landless Credit Project (SFLCP)

• Poverty Alleviation Micro Finance Project Revolving Fund Loan

Scheme(PAMPRF)

(Central Bank of Sri Lanka, 2008).

1.5 DFCC Bank

With regard to licensed specialized banks, National Savings Bank and DFCC Bank are

the most important banking institutions. About 83% of the LSB assets are held by these

banks. DFCC Bank is a Systematically Important Specialized Banks (SISBs) and is a

long term financial institution (Central Bank of Sri Lanka, 2007).

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According to Fernando (2007) “The proposal to set up the DFCC Bank was first mooted

in Sri Lanka by the first World Bank mission which visited the country in 1952” (p.1)

DFCC Bank is “ a quoted public company with limited liability incorporated by DFCC

Bank Act No. 35 of 1955. A licensed specialized bank under Banking Act No.30 of

1988.” (DFCC Bank, 2008, p.129). One could indicate 1956 as the year DFCC Banks

launched commercial operations (DFCC, 1997). Currently DFCC Bank is an important

corporate of Sri Lanka and its the contribution of the DFCC Bank to the social and

economic growth of the country is vital. Employments created directly due to projects

supported by DFCC Bank is over 500 000. It supported 50000 projects and more than

half of them were new. In recent years the average of the percentages of the total

investments of the DFCC Bank realized in th economy exceeded 9% and the Bank was

identified as the best managed company in Sri Lanka by the Asia Money which is a

popular international magazine (Fernando, 2007)

The purposes of the DFCC Bank are emphasized in the DFCC Act (Sri Lanka, 1995)

To assist in the promotion, establishment, expansion, modernization of private industrial,

agricultural and commercial enterprises in Sri Lanka and to encourage and promote the

participation of private capital both internal and external, in such enterprises. (p.119)

To uphold the corporate social responsibility of the DFCC Bank, it strives to eradicate

and prevent the harmful effects that can cause by the DFCC Bank to its internal and

external customers, nation and the world (DFCC Bank, 2008). Building and improving

the skills of the entrepreneurs, creating an excellent society for children, building an

improved community, protecting the environment, and helping and assisting professional

organizations are some of the measures undertaken to maintain the corporate social

responsibility (DFCC Bank, 2008).

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DFCC bank is a competitive financial institution in Sri Lanka. This is emphasized by the

vision, mission and of DFCC bank (2008). Its vision statement is “to be Sri Lanka’s

premier financial services group”. Its mission is “to provide superior financial solutions

and nurture business enterprises, adding value to our customers, shareholders, employees

and the nation” Furthermore according to DFCC Bank (2009) “Accountability, be

ethical, passion for innovation and excellence, respect for the individual, social

responsibility and team work” (p.1) are considered as the values of the DFCC Bank.

DFCC Bank is one of the successful Development Finance Institutions in the Asia and

the Pacific region. It has won ADFIAP (Association of Development Financing

Institutions in Asia and the Pacific) Development award for Infrastructure Development

in 2002 and also the ADFIAP award for Best Website in 2005 (DFCC Bank, 2008).

The products and services offered by the DFCC bank are indicated below:

• Lending

• Investment Banking

• Leasing

• Deposit

• Cash management (DFCC Bank, 2008)

The DFCC Bank has expanded its business as a result of its associate and subsidiary and

joint venture companies.

• Acuity Partners (PVT) Limited

• DFCC Vardhana Bank Limited provides commercial banking

• Lanka Industrial Estates Limited provides leasing of land and building for

industrial enterprises.

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• Lanka Ventures PLC provides venture capital financing

• Synapsys Limited provides information technology services and information

technology-enabled services

• Commercial Bank of Ceylon PLC provides commercial banking

• National Asset Management Limited provides fund management

• DFCC Consulting (Pvt) Limited provides consulting services

(Google Finance, 2008)

DFCC Bank functions as a Participating Financial Institution of some of the Regional

Development Lending Programs implemented by the Central Bank of Sri Lanka. These

programs are Second Perennial Crops Development Project, Tea Development Project,

Construction Sector Development Project, Post Tsunami Line of Credit-EIB Contract B

Loan Scheme, Small Business Revival Project (SBRP), Susahana Loan Scheme (Central

Bank of Sri Lanka, 2009). One salient feature has to be added with regard to DFCC

Bank’s support in fostering development projects; the DFCC Bank, apart from supporting

its local projects, offers advisory services, with DFCC Consulting (PVT) Limited, to its

local clients who have commenced construction and hydropower projects in East Africa

(DFCC Bank, 2008).

Due to the importance of good corporate governance, DFCC Bank maintains standards

of the institution’s corporate governance in keeping with codes and rules accepted. The

Direction No. 12 of 2007 by the Central Bank of Sri Lanka and Listing Rule No. 6 of the

Colombo Stock Exchange are mainly followed by the Bank (DFCC bank, 2008).

Moreover DFCC Bank’s managers play vital role in maintaining almost all aspects of the

functions of the bank contributing to its growth at all times and survival during adverse

situations.

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1.6 The Managers of the DFCC Bank

DFCC Bank is headed by General Manager/ Director & Chief Executive Officer. The

other managers of DFCC Bank are Project Executives, Senior Project Executives,

Assistant Vice Presidents (AVP), Vice Presidents (VPs), Senior Vice Presidents (SVPs)

Executive Vice Presidents (EVPs) and the Chief information officer of the DFCC Bank.

DFCC Bank managers are an important category of the human resources in the Bank as

they contribute to the main decision making process and implementing them. The goal of

these decisions are to contribute to the fulfillment of the organizational mission, vision

and to uphold the values of the DFCC Bank. The importance of the managers of the

DFCC Bank, for the purpose of research, could be further justified as they are the

managers of one of the two Systematically Important Specialized Banks (SISBs) of Sri

Lanka.

The managers belong to different divisions namely the Lending, Human Resources and

Special Loans Administration, Group Treasury, Operations, Information Technology,

Legal and Secretarial, Audit, Corporate Communications, Risk Management and Project

Management (DFCC Bank, 2008). Most of these Division are divided into business units

where certain specific banking businesses are carried out. The managers of the DFCC

Bank carryout their managerial duties with the support of their superiors, parallels and

subordinates. The functions and the responsibilities of the DFCC Bank managers are

diverse. Consequently their functions and responsibilities are discussed below in a brief

manner for the purpose of introducing the managers of the DFCC Bank in accordance

with keeping with their business divisions

Lending Division

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The lending division deals with the lending aspects in accordance with the policies, rules

and strategies used by the bank. It has the responsibility of customer service and it

attends to the lending and advancement. It also monitors the credit worthiness and ratings

and the viability of the projects. The lending division also extends support for the

development of the business. Furthermore, deposit mobilization, leasing, Corporate and

investment banking and the branches of the DFCC Bank are included in the lending

division (DFCC, 2008).

Treasury

The treasury borrows money from the market depositors and the excess money is

invested in the money market and the capital market. Group Treasury also assists Asset

and Liability Management Committee in interest rate risk management (DFCC Bank,

2008).

Project Management Division

The division of Project Management is responsible for administration and management of

four credit programmes of the Government of Sri Lanka. They are indicated below:

• The World Bank and Global Environment Facility (GEF) - assisted Renewable

Energy for Rural Economic Development (RERED) Project

• The credit module of the Plantation Development Project financed by the Asian

Development Bank and revolving fund arranged by the Government of Sri Lanka

• The European Investment Bank (EIB) supported by Post-Tsunami

Reconstruction Project

• The KfW-supported Small and Medium Enterprise Development Project in the

North and East (DFCC Bank, 2008).

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The head of the Project Management department has the overall management of this

department.

Human Resources and Special Loan Administration Division

Managers of the Human Resources Division are involved in restructuring and recoveries,

human resources operations and resourcing, training and talent management and also

recruiting, interviewing and various other functions with regard to human resource

development (DFCC Bank, 2008). In order to strengthen human resources of the DFCC

Bank, attention is now paid to higher education institutions where the bank is able to have

better access to talented young professionals (DFCC Bank, 2008).In 2008, DFCC Bank

was able to achieve a gold award for its excellence in human resource practices (DFCC

Bank, 2008).

Department of Special Loan Administration looks after non performing loans, leases etc.

Finance Division

Managers of the Finance Department of the Bank carry out multiple of functions such as

financial analysis, & accounting and reporting (DFCC Bank, 2008). Financial Analysis

Division helps the Asset and Liability Management Committee in examining market

interest rate situation and supports interest rate risk management (DFCC Bank, 2008).

Operations

Operations consists of procurement and services and transaction processing. The head of

the procurement and services is in charge of the procuring materials, supplies and other

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functions such as looking after infrastructure and other facilities of the bank (DFCC

Bank, 2008).

Division of Information Technology (IT)

The managers of the Information Technology department manage Business Systems,

Network & Technical Services, IT/ Application Systems (DFCC, 2008).

Corporate Communication Division

Managers of the Corporate Communication Division has the responsibility of overall

management of the departmental duties such as market research, managing certain brands

of the DFCC Group; Furthermore the department handles certain areas of projects such as

the project related to corporate social responsibility concerning schools (DFCC Bank,

2008).

Legal and Secretarial Division

The managers of the Legal and Secretarial Department consists of Senior Vice President

who is the General Counsel and who is also the Board Secretary and there is also a Vice

President –Legal (DFCC Bank, 2008). Apart from the routine duties allotted to the legal

department, such as managing of legal functions of the bank, they also take prompt steps

to mitigate the Legal risks.

Internal Audit

The Head of the Internal Audit functions as the Secretary to the Audit Head Committee.

Thus, managers of the Internal Audit contributes to the activities and roles of the Audit

Committee which are; identifying the extent and the effectiveness of the internal control

systems, reviewing the statutory accounts, and published financial statements, carrying

out periodic audits. (DFCC Bank, 2008).

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Integrated Risk Management Division

DFCC Banks risk management division identifies the risks that can have negative impact

on the bank prior to certain banking functions and operations. This is related to

management of credit risk, operational risk, liquidity risk, market risk, business risk, legal

risk, and reputational risk. (DFCC Bank, 2008).

1.7 Information

Unlike other resources, more information is used, more and more information is

generated.

Information is described Devarajan (1995) as:

“Information is the very basis of human existence. It is undoubtedly and increasingly

being recognized that information is a vital resource” (p.9).

As this case study assesses information needs of the bank managers in Sri Lanka focusing

on DFCC Bank, information can be further described as follows:

Certain types of information have a long term value to the financial services sector. But

there are contradictory views to this statement as well. According to Pantry and Griffith

2002) “Users of business and financial information are already used to an environment

where information purchased at a high price can be useless 20 minutes after its original

delivery”. (p.60).

Thus time and information can be considered as some of the main resources needed to the

financial services sector. The reason to this could be further explained by considering

time as a main measure to differentiate between historical information and current

information. Although current information could be worthless in the future, there are so

many instances where current information should be kept archived for future references.

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Thus it could be stated that many times, current information when become historical

information in the future has an immense value for financial services sector. To elaborate

this factor, it could be stated that when there is a financial crisis it is necessary to trace

historical information to compare the existing situation with the past, for decision making

purposes and forecasting.

The well-known reference tools Kompass directories, financial newspapers such as

Financial Times and Economist can be found in paper based and electronic formats. The

BBC, Reuters and Bloomberg can be categorised as providers of different approaches to

current business news (Pantry and Griffiths, 2002). When identifying information in the

limelight of the financial services sector, it could be noted that the service of above

named facilities proves that the changes of the other sectors are interrelated with the

changes taking place in the financial services sector.

1.8 Information as a Valuable Resource to the Bank Managers

Banks as an integral part of the financial services sector in Sri Lanka is totally

information dependent for their main purposes of existence. These purposes are

maintenance by profit making which is necessary if banks are to fulfill the two other

main purposes namely provision of value added products and services to develop their

customer and to concentrate on national development. It is necessary to indicate that

these three purposes are interlinked by information usage.

Bank managers for their various activities use external information and internal

information. They need to have more knowledge about and dealings with the external

environment and internal functions and processes of the bank. It is noteworthy that the

managers who are in need of external information will also need information on internal

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processes and the managers who are in need information about the internal process would

also in need of external information as well.

A bank manager need information on business opportunities available in the geographical

area he is working. He should have information on whether he is able to access business

opportunities available to him. He should know the cross sellings that he can offer if he is

able to access the business opportunity. The bank manager should know according to his

target market whether he has the accessibility the available business opportunities.

Furthermore, a bank manager should have information on his competitors and their

reaction to business opportunities. And the market share of the branch, competitor

strategies, characteristics of the competitors and even the competitor managers even by

their names. Apart from that, he should have information on what facilities are given by

the competitors to their customers. He also needs information on competitor in order to

build good rapport with them. Thus, there should be balanced relationship with the

competitors.

Information on customer is also an important aspect to the bank manager. They should

know who their best customers are and their contribution to the bank and the business.

Thus Customer Relationship Management (CRM) is an important factor which means

understanding the valuable customer and making a long term relationship with him.

Apart from that he should know about the customer behavior, attitude, and the

influencing forces of the customer; whether the customer is trying to fulfill the need of

another person.

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Then the bank manager has the requirement to know about his staff; mainly about their

skills, knowledge, attitude, interaction with other customers and the best person to build

healthy rapport with the customer.

Internal information is also an important factor needed by the bank managers. Internal

processes, circulars, rules and regulations and profit level of the last couple of years, his

branch performance in comparison to other branches, their loans, deposits, current

accounts, and other products and services.

The Bank manager also needs to have a fair knowledge about public relations, culture,

the society of his geographical area. Because when they have to represent the bank as

leader and manager when there is a ceremony in the geographical area he is working in,

information about the area and its culture would help him to maintain the organizational

image.

Furthermore, the bank manager needs to know about branch operations and need the

knowledge about the overall performance of the bank. They should know about the

product portfolio and industry portfolio and the amounts of funds allocated for them. He

also should know about the economy of the country and government decisions and

regulations so that he will be able to make plans and decisions accordingly.

Then the bank manager needs to have information on technical aspects and subjects

specific aspects without which he cannot give guidelines to the branches and his

subordinates.

According to eminent bankers it is a common that there can be an information gap

between information that the branch managers have and the information that the Head

office managers have with regard to information related to geographical areas. Due to

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this factor, although the branch managers have feasible and productive project proposals ,

these will get rejected by the Head Office managers due this information gap (Gamage,

2010).

The managers in a bank could be divided into two main categories namely managers

whose work roles are mainly connected to the external environment and managers whose

work roles are mainly concerned with the internal operations and process.

1.9 Information Sources Needed by Bank Managers

Bank managers playing a major role in the decision making process in their

organizations use information from both internal and external information sources.

As for the most important internal information sources Bank managers use information in

their databases for example account information, product information, customer

information and also marketing information. At the same time some information is held

in word processed documents.

With regard to external information sources, bank managers use external information

source for reference information, annual reports and about business environment,

competitor and customers. ( Fawcette, 2003).

In Sri Lanka the bank managers in order to obtain information use information sources

such as provincial sources AGA Office, Business registras, education office, department

of census and statistics, income tax department, telephone directory, Chamber of

Commerce, foreign employment bureau and also market research. Apart from that Credit

Information Bureau of Sri lanka, stock exchange, Balance Score Card, Situational

analyses such as SWOT analysis and PEST analysis.

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In addition, the bank managers need web sites, periodical, subject specific publications,

internal regulatory documents and also information sources related branch performances.

Apart from that, the information sources related to the economy, legal developments and

other macro environmental information sources and micro environmental information

sources are needed by them. They could also benefit from situational analyses and

information sources related to current financial situation.. (Gamage, 2010)

1.10 The Role of Information at the DFCC Bank

For the purpose of this case study the researcher divides the managers of the DFCC Bank

in to three categories namely the managers whose work roles are mainly related to the

external environments, managers whose word roles are mainly related to the internal

process and operations of the bank and also Human Resources and Special Loans

Administration division. Human Resources and Special Loans Administration division

has both qualities where Human Resources division is mainly concerned with the

internal processes of the DFCC Bank where as Special Loans Administration division is

mainly connected to the external environment of the Bank.

Information could be defined as a fundamental resource needed for all activities of a life

of human being. Thus, when considering information as a decisive factor, the extent of

the validity of information used for a specific purpose paves the way to its success or

failure. Organizations grow and survive mainly due to the contributions made by its

internal and external customers. The constitution, decisions, programs, and all other

aspects related to healthy communication patterns of external and internal customers

consist of information needed by the organization. This situation is common to DFCC

Bank as well.

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Walter, as cited by McNaughton (1992) suggests that information as a competitive

strength for Banking,

Banking is an information-intensive business. The capacity to collect and use information-

particularly credit information- is one of a bank’s valuable contributions to the economy.

The collection and evaluation of information is critical to lending and credit-related

activities, as well as to the development of products and services, some of which, such as

financial advisory services, must have high-quality information to be of value to bank

customers. (p.11)

Internal reporting of the DFCC Bank can be described mainly as information seeking

behaviour at first, which leads to information gathering, processing, and presenting

information from top to bottom and bottom to top according to the hierarchy of the

internal customers. Information seeking at this instant is identified as a manner of

gathering external information. Although this situation is the same with reporting internal

information, apart from the above process, information generation too takes plays within

DFCC Bank. This is also a fundamental part of internal reporting related to top to bottom

and bottom to top flow of information.

For the enhanced and efficient management the DFCC Bank, gathering, updating,

organizing and transmitting information is implemented in a systematic and a

standardized manner. It is evident that not only the information centre of the DFCC Bank

has the responsibility in dissemination of information, to fulfill the information needs of

the organisation but also each and every internal customer has a vital role if they are to

carry out the functions successful by maximizing the productive usage of information.

Thus information management is done not only through the usage of mechanization and

computerization, but manual effort is also needed (ADFIAP, 2001).

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DFCC Bank, to be parallel and to be competitive with other organizations, as well as to

carry out its functions, make reforms to certain important matters. For this purposes

environmental scanning is necessary. The customer, competitor, technological, regulator,

economic and socio-cultural sectors are the main environmental sectors. The impact of

the decisions made by the Central Bank of Sri Lanka, world economy, national economy,

national security, government, developments in the industry and the financial sector,

customers, and society can be taken as factors considered when scanning the

environment. The information pertaining to environment is reinforced by maintaining

contacts with related institutions. Media too play a vital role with regard to obtaining

information by DFCC Bank. By identifying these factors it could be indicated

information from diverse areas and disciplines is needed for the functioning of the DFCC

Bank.

Various types of communication patterns such as horizontal, vertical, internal and

external bring about routine and sudden flows of formal and informal information at the

DFCC Bank. Through various discussions, telephone calls, email, and in writing the

internal and external customers of the Bank update knowledge pertaining to matters

related to DFCC Banks. Thus, information and communication has a fundamental link to

maintain customer relationships.

Various matters pertaining to risk management is taken into consideration at the DFCC

Bank; for example DFCC Bank has an Integrated Risk Management Committee. DFCC

Bank and DFCC Vardhana Bank Limited review and the risk management processes with

regard to main areas of Credit risk, market risk, interest rate risk, equity price risk,

exchange rate risk, liquidity risk, operational risk, risk arising from Treasury Operations,

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reputation risk, business risk and legal risk are taken into consideration (DFCC Bank,

2008).

As a precaution to money laundering and fight against financing of terrorism, DFCC

follows principles such as the Know Your Customer (KYC) principle and Customer Due

Diligence (CDD) (DFCC Bank, 2008). Know Your Customer principle is mainly to

identify good and bad customers in a bank. A customer profile is created and this

includes information to serve purposes like fulfilling legal needs in a manner to maintain

the banker-customer relationship, to identify customer needs, and to identify different

types of customers (Indian Institute of Banking & Finance, 2005).

It is necessary that the DFCC Bank like other banks provide periodic information on their

operations to the Bank Supervision Department of the Central Bank of Sri Lanka. On the

basis of this information, financial condition of the DFCC Bank is monitored by the

Central Bank of Sri Lanka (Central Bank of Sri Lanka, 2008). Moreover DFCC Bank

provides information to their creditors and also to general public. A suitable degree of

publicity with regard to DFCC bank is provided. For these purpose news agencies,

financial journals and the DFCC Web site play an important role. Providing information

to the customers is of great importance to DFCC Bank. For example, the Bank in order

to develop the Small and Medium Enterprises ( Small and Medium Enterprises) sector

while financing the projects, provide suitable training and assist to strengthen the

management capabilities of the entrepreneurs (DFCC Bank, 2008). The Bank also obtains

information about the projects and the capital expenditure from customers.

Furthermore, DFCC Bank periodically provides operations related information through

their annual report, financial overview, second quarter information etc which include

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components such as the income statement, CEO’s review, cash flow statement and

selected performance indicators. This aspect is needed to educate various institutes and

also the public about the DFCC Bank prevailing situations.

When dealing with the role played by information at the DFCC Bank, the importance and

the value of information does not change according to the hierarchy of the positions held

by the internal customers although information types needed and information seeking

behaviour changes according to their work role. In order to obtain expected productivity,

survive at adverse situations and grow at all times DFCC Bank as any other organization

depends on the extent of the contribution of the information.

The DFCC Bank library plays a major role in information seeking, information gathering,

information sorting, information organizing, retrieving organized information and finally

transmitting information to the internal customer who are in need of information. DFCC

library is resourced with various documents which are indispensible for the purposes of

the Bank and for recreation of the internal customers. Books, audio visual (A/V)

materials, photos, past examination papers, study packs, local an foreign magazines, news

papers, and other periodicals from various institutions updating their information are

some of the information resources. Moreover annual reports, prospectus, and brochures

of various institutes are also received by the library. The DFCC Bank library is an active

participant of the information network which includes member libraries such as the

Central Bank Library, the Sri Lanka, Chamber of Commerce Library, Institute of Policy

Studies, and the Bank of Ceylon Library. DFCC Bank Library also maintains an archive

for valuable documents and back copies of important periodicals. The library has a

classified catalogue with traditional catalogue entries which could be called document

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surrogates for easy retrieval of information. DFCC Bank Library caters its customers

with internet facility, interlibrary loans, and also answering reference queries as well.

Hence, library is a fundamental component to almost all departments and internal

customers of the bank as its contribution is vital for the information needs of the Bank.

DFCC Bank’s Human Resource portal is a useful source of information which internal

customers can update their basic knowledge about others and themselves. Important

information on salaries, medical facilities, designation, and leave is found in the Human

Resources portal. Official requests, notices and messages are sent through lotus notes to

each individual.

The Information Technology Department (IT) has many functions which show the vital

role of information played at the DFCC Bank and how methodically information systems

are managed for the retrieval of different types of information with regard to divers

banking businesses. To discuss them briefly there are different application systems for

different purposes such as leasing system, Co banking system and Enterprise Resource

Planning (ERP) system. In keeping with the information needs of each division of the

Bank these systems are further divided into sub modules. Co banking system has a

deposit module, a consumer corporate loan module and a retail banking module etc.

Manually, appropriate information is fed into each module by the respective employees

and each division of the bank is able to retrieve information from these systems. Thus, by

the IT department facilitating access to information is supported to the maximum in

keeping with needs to deal with DFCC Bank products and services which helps to

achieve the goals of the Bank.

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In order to take vital decisions and also to implement them and monitor them, the

managers of the DFCC Bank contribute their knowledge. Each and every manager has a

specialized specific field. The managers of the DFCC Bank for their various banking

businesses uses ICT in order to carryout their duties which would reach their long term

and short term goals. In order to take correct timely decisions they should have an

updated knowledge of various factors. Hence, the importance of information

dissemination in a productive manner and exchange of information between the internal

and external customers are fundamental. Because each and every decision taken by the

managers of the DFCC Bank is partially or wholly depends on the extent of appropriate

information that they have obtained. Awareness of information to the managers and to all

other employees of the DFCC Bank is a necessity. As a result information according to

its relevance to DFCC Bank can be divided into two categories namely financial and non

financial information

1.10.1 Financial Information

• Institutions

- Central Bank

- Licensed Commercial Banks

- Licensed Specialized Banks

- World Bank

- Asian Development Bank

- Registered Finance Companies

- Registered Finance Leasing Establishments

- Authorized Primary Dealers

- Stock Broking/Dealing Companies

- Unit Trust Companies

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- Insurance Companies

- Venture Capital Companies

- Micro Finance Institutions

- Non Governmental Organizations

• Financial Markets

- Money Market

- Capital Market

- Foreign Exchange Market

• Financial Instruments

- Deposits

- Loans

- Treasury Bills and Bonds

- Repurchase Agreement

- Commercial Papers

- Corporate Bonds & Debentures

- Asset Backed Securities

- Finance Leases

- Shares

- Financial Derivatives

(Central Bank of Sri Lanka, 2008)

• Financial Statements of DFCC Bank and other important institutions

- Balance Sheet

- Income Statement

- Cash flow Statement

- Retained earnings statement

- Statement of changes in owner’s equity

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• Credit lines

1.10.2 Non Financial Information

• Business and Industry

• Competitors information

• Environmental information ( Weather/Climate etc)

• External customers information

• Statistical Information

• Government regulations and policies

• Market Information

• Legal Information

• Economic Information

• Products and services

• Internal Customers

• Technology

• Weather/Climate

• Training

• Standards/Quality

• Technical Information

• Government lending/Credit programs and other projects

• Cultural information

• Social information

It could be noted that the two categories of information which are financial component of

information and non financial component of information include information from

numerous fields. The importance of information on each area fluctuates according to the

situation. Satisfaction of the extent of being able to have access to the information

depends on various criteria such as ease of access, language, and background knowledge

of the managers. Therefore the case of the managers of the DFCC Bank is chosen as the

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main purpose of research which would assesses their information needs and briefly

identify the managers access to information and the levels of satisfaction in their

fulfillment of the information needs. As a positive outcome of the case study, the

researcher intends to provide recommendations on improved usage of information

facilitating to carryout duties of the managers of the DFCC Bank.

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1 FinalChapter 1- Introduction After SW Perusal

Documents

Transcript of 1 FinalChapter 1- Introduction After SW Perusal