We write to inform you that the Board of Directors of DFCC Bank at its Meeting held on 28 February 2007 decided to declare an interim dividend of 45% to its shareholders for the financial Year 2006/2007. The payment date will be notified to you in due course.

At its Meeting held on 28 February 2007, the Board of Directors further decided to recommend to shareholders the issue of one share for every four shares held at the price of Rs140/- per share (par value Rs10/-) and also to issue one bonus share for every five shares held by the shareholders on the increased share capital after the Rights Issue. The Rights and Bonus shares will not be eligible for the interim dividend.

The Rights Issue, the first after 1993 is intended to raise approximately Rs3,030 million of new equity capital to support the Bank's business expansion plans, maintain prudential ratios including the additional regulatory capital requirements arising from the scheduled introduction of Basle 2 Capital accord in 2008 whilst participating in the rights issue of the Bank's associate company, Commercial Bank of Ceylon Ltd.

The issue of Rights and Bonus shares will be subject to the approval of shareholders to be obtained at an extraordinary general meeting on a date to be advised in due course and of the Colombo Stock Exchange.

T Wijemanna
Secretary to the Board

1 March 2007