This will be HDFC's second overseas foray. In October 1997, HDFC teamed up with IFC and invested about Rs 2.7 crore for 15 per cent stake in a local insurance company--Delta Brack Housing Finance Company in Bangladesh.

In both the ventures, HDFC will also impart technical consultation in the areas of new housing finance products, back up services and extension of product line.

NDB Housing, the largest single source of long-term finance in Sri Lanka, is promoted by National Developmant Bank of Sri Lanka. NDB is ranked among the top 10 development banks in Asia in terms of profitablity and assets.

HDFC managing director Deepak Satwalekar said: "The opportunity to invest in Sri Lanka is signifianct considering that this will, to an extent, contribute to the larger role that India has to play in promoting economic co-operation amongst the SAARC countries. India has the capacity and know-how to provide technical assistance to member countires. This association will be an important step in that direction."

The agreement was signed by Satwalekar, IFC vice president Assaad Jabre and general manager NDB Ranjit Fernando.

According to HDFC senior officials, the overseas investment is not merely profit-driven but we do expect to plough back some earnings. The primary intention is to exchange techincal knowhow in the third world countries. NDB Housing will provide long-term home mortgage loans and poineer other mortgage products in Sri Lanka.