Parliament’s finance committee has questioned whether Sri Lanka’s banks are lending in a way that supports productive investment, after being told that short-term credit is growing while long-term lending shrinks.
The Committee on Public Finance, chaired by MP Dr. Harsha de Silva, put the question to the Central Bank at a meeting attended by Governor Dr. P. Nandalal Weerasinghe and senior Central Bank officials, the Daily Mirror reported at 4.20 p.m. on Wednesday. Deputy Minister Chathuranga Abeysinghe and several MPs also attended.
The numbers behind the question
Credit extended to the private sector in the first nine months of 2026 reached Rs 2.1 trillion, up from Rs 1.9 trillion in the same period last year. About 74 per cent of it came from licensed commercial banks.
The committee’s concern is not the total but its composition:
- Short-term loans rose from 42 to 47 per cent of lending
- Long-term loans fell from 35 to 29 per cent
That shift is what prompted the committee to ask whether bank lending is adequately supporting capital formation, new investments and the expansion of production capacity — in other words, whether credit growth is financing working capital and consumption rather than productive capacity.
Growth in mortgage and vehicle loans was also discussed, alongside inflation targeting at 5 per cent and reforms in the trade, labour and land sectors.
The banking sector’s own position
On the health of the banks themselves, the picture put to the committee was improving. The non-performing loan ratio declined from 9.7 to 8.8 per cent, and capital and liquidity levels remained above regulatory requirements.
One institution was singled out. The NDB Bank forensic audit was referred to the Attorney General on 15 October 2026, and regulatory measures have been imposed including restrictions on dividends and expansion.
Deepfakes of the Governor’s own officials
The committee also took up financial scams using AI-generated deepfakes of Central Bank officials and lawmakers — impersonations of the very people in the room, used to lend credibility to fraudulent schemes.
The filing does not say how many such scams have been detected, what sums are involved, whether any prosecution has followed, or what the Central Bank proposes to do about them.
Context
This is the committee’s second substantive session reported by this desk in two days. On 10 November it questioned the structure of fuel pricing regulation, and it has recently examined tyre import controls and the 2027 Appropriation Bill. The session falls on the eve of the 2027 Budget speech, due in Parliament on Thursday.
Update: a fuller account fills in several gaps
On 12 November the Daily Mirror published a second, substantially longer account of the same committee session under its business desk, Short-term loans take bigger share as private credit hits Rs 2.1tn. It repeats the headline figures above unchanged and adds detail the first filing omitted.
On monetary policy. Central Bank officials told the committee the headline inflation target, measured on the Colombo Consumer Price Index, will remain at 5 per cent over the next three years. They said seven special reports had been submitted to Parliament on occasions when inflation fell below the 3 per cent lower bound of the target range. The Central Bank Act requires the bank to report to Parliament when it misses its target for two consecutive quarters.
On bank health. The banking sector’s Stage 3 non-performing loan ratio has fallen to 8.8 per cent, from 9.7 per cent, with capital and liquidity above regulatory requirements.
On NDB. The forensic audit and a report by the Sri Lanka Accounting and Auditing Standards Monitoring Board were referred to the Attorney General on 15 October. The Central Bank has imposed restrictions on dividend distributions, branch expansion and directors’ remuneration at the bank.
On the deepfake scams. The impersonations used AI-generated images and voices of public figures including the Governor and the Prime Minister. The Central Bank said it was coordinating with the telecommunications regulator, Sri Lanka CERT, the police and Meta to counter them.
The session also covered trade, labour and land reforms alongside monetary policy, with participants identifying skills development, higher productivity and foreign direct investment as priorities for sustaining growth. The committee additionally discussed the regulation of virtual assets and cryptocurrencies.
Still not reported
Neither filing gives a bank-by-bank breakdown of the lending shift, identifies which sectors received the credit, or records the Central Bank’s answer to the committee’s central question — only that the question was asked. Neither says what the remaining 26 per cent of private credit came from, nor whether the short-term shift is attributed to borrower demand or to bank risk appetite. No figure is given for the NDB audit’s findings or the conduct under examination, and neither says how long the restrictions will run or how many deepfake scams have been detected.
A note on sourcing. The first filing carried no reporter byline, its JSON-LD author field reading “Administrator” — this desk’s tell for a submitted or release-derived item. The 12 November account is bylined “DM Editorial”. Both are Daily Mirror filings, so this report still rests on a single verified newsroom; no other verified outlet has filed an independent account of the session.
