CBSL to wind down Nation Lanka Finance after failed rescue efforts

 Says deposit insurance to fully reimburse 99.1% of depositors; rest will receive up to Rs. 1.1 m as part payment with balance upon liquidation based on priority of claims

 Depositors will have six years until 2 July 2032 to submit claims under the deposit insurance scheme

The Central Bank of Sri Lanka (CBSL) yesterday revoked the finance business licence of Nation Lanka Finance PLC (NLFP) and initiated the winding-up of the company, bringing to an end a year-long resolution process after efforts to revive the troubled institution failed to secure a sustainable outcome.

The regulator said the licence was cancelled with effect from 3 July under the Banking (Special Provisions) Act, No. 17 of 2023, citing the continued deterioration of the company’s financial position and the need to safeguard the interests of depositors and other stakeholders.

NLFP was placed under administration on 4 July 2025 after repeatedly violating the Finance Business Act, No. 42 of 2011, despite a series of regulatory interventions by CBSL. P.W.D.N.R. Rodrigo was appointed Administrator at the time, assuming full control over the company’s assets, operations and affairs.

CBSL said that throughout the past year, acting in its capacity as Resolution Authority, it pursued a range of resolution strategies in coordination with the Administrator.

These included exploring structural options to revive the company, facilitating possible acquisitions by licensed commercial banks and finance companies, and issuing an open call for expressions of interest from prospective investors.

However, the regulator said none of these initiatives resulted in a viable and sustainable resolution.

“In light of the continued deterioration of the company’s financial position, and considering that the continuation of its current status would be further detrimental to the interests of depositors and other stakeholders,” CBSL said it had decided to revoke the licence and proceed with winding up the company under Part V of the Banking (Special Provisions) Act.

The Central Bank said the Sri Lanka Deposit Insurance Scheme (SLDIS) will compensate insured depositors up to a maximum of Rs. 1.1 million per depositor.

According to CBSL, this will fully reimburse approximately 99.1% of NLFP’s depositors, while the remaining 0.9% will receive Rs. 1.1 million as a part payment of their deposits. Any outstanding balances may be recovered during the liquidation process, subject to the statutory order of claims under the Act.

The compensation payable will be calculated by aggregating all eligible deposits and unpaid accrued interest held by each depositor as at the date of licence cancellation. Depositors will have six years until 2 July 2032 to submit claims under the deposit insurance scheme.

CBSL said details on the commencement of compensation payments, payment methods and claim procedures will be announced separately through newspaper notices and on its website. It advised depositors to keep their original deposit certificates and identification documents ready pending the commencement of payments.

The regulator also instructed all borrowers of Nation Lanka Finance PLC to continue servicing their outstanding facilities on time by making payments only to bank accounts maintained in the company’s name and to retain proof of all transactions, warning that legal action could be taken in the event of non-payment.

As per end-March 2026 financial statements, the company reported total assets of Rs. 4.25 billion against liabilities of Rs. 6.4 billion for a net liability of 31 cents per share.

Its deposit base stood at Rs. 4.14 billion with other borrowings at Rs. 1.3 billion and trade and other payables at Rs. 742.5 million. Singhe Capital Investment Ltd was the top shareholder with a 38.21% stake followed by VR Ramanam 13.8%, Mutual Holdings Ltd. 13.7% and NSA Cooray 3.27%.