The Committee on Public Finance has described the Rs. 13.2 billion internal fraud at the National Development Bank (NDB) PLC as a serious breach of governance in the banking sector, marking the first formal parliamentary finding on a scandal that has already triggered four arrests and a temporary trading halt.
Committee chair Dr. Harsha de Silva told The Island that the issue was raised with Central Bank officials on Tuesday (April 7), when CBSL Governor Dr. Nandalal Weerasinghe and senior management appeared before the parliamentary watchdog for a statutory presentation. He described the NDB case as a “serious breach in governance” that demanded a hard look at how supervision and internal oversight had been maintained.
The Governor informed the committee that an initial investigation into the alleged fraud is now underway and that the Central Bank would report back once more information is gathered, according to statements released by the committee. CoPF flagged “significant lapses in corporate governance at the bank, shortcomings in supervision by relevant Central Bank departments, and delays in reporting material information” as “unacceptable,” and directed that immediate corrective measures be taken. The committee said it would maintain strict oversight to ensure accountability and public confidence in the financial system.
NDB initially reported the loss at Rs. 380 million when it first disclosed the matter to the Colombo Stock Exchange and the Central Bank, but within days revised the figure to Rs. 13.2 billion as the internal investigation expanded. The discrepancy between the initial and revised disclosures is itself under parliamentary scrutiny, alongside questions about how the fraud went undetected for so long.
The Central Bank has said a preliminary assessment confirms NDB’s capital adequacy and liquidity ratios remain above minimum regulatory requirements despite the reported loss. Fitch Ratings subsequently downgraded NDB to A-(lka) with a Negative outlook, citing the fraud’s impact on capital buffers. CBSL added that the bank could also access temporary liquidity facilities if needed and that the situation was under active monitoring. CBSL Governor Nandalal Weerasinghe has suspended NDB’s cash dividend and frozen branch expansion pending the investigation’s conclusion.
Sources in the banking sector told The Island that the priority now was to maintain public confidence in the wider financial system and prevent any risk of contagion from spreading to other lenders. Attention is expected to turn to whether internal controls, audit procedures, and regulatory supervision need to be strengthened across the sector. Opposition MP Ravi Karunanayake has already demanded answers in parliament over CBSL’s supervisory failure.
NDB’s major shareholders include the Bank of Ceylon, Sri Lanka Insurance Corporation, the Norwegian Investment Fund, the Employees’ Provident Fund, and Metrocorp. A fourth suspect was arrested on April 8 by CID’s Computer Crimes Division as the investigation continues.
