NDB Board gets flack for ignoring high Rs. 12.3 b receivables arising from CEFT deals

• Audited 2025 accounts show ‘Other Financial Assets Gross’ at Rs. 12.22 b, four times more than Rs. 3.1 b in 2024 whilst standard average in previous years had been Rs. 1.4 b
• NDB insider uses CEFT to siphon Rs. 13. 2 b
• Good governance activists allege fraud and failure was a clear violation of controls and monitoring oversight by Finance, Internal Audit and top management and overall the Board risk and audit committees

By Nisthar Cassim

The Board and senior management of Rs. 13.2 billion fraud-embattled NDB has come under flack for ignoring a sharp rise in receivables arising from CEFT transactions in 2025.

As per the audited 2025 Annual Report of NDB, under Other Financial Assets Gross amounted to Rs. 12.22 billion, a sharp increase from Rs. 3.1 billion in 2024. This includes receivables arising from Customer Electronic Funds Transfer (CEFT) transactions. In 2023 it was Rs. 1.4 billion and Rs. 1.9 billion in 2022. 

Analysts said usually CEFT suspense accounts have an average balance of Rs. 1.4 billion which was the figure in 2021 as well.

As per disclosure by NDB that the estimated amount of fraud was Rs. 13.2 billion, analysts pointed out that from January to March 2026 the additional amount was Rs. 1 billion.

Based on this assessment, the fraudster has been doing this since mid-2024 or around 18 months.

“It is a clear violation of controls and monitoring oversight by Finance, Internal Audit and top management and overall the Board risk and audit committees,” good governance activists alleged.

Other analysts warned that NDB may try to show this fraud as an old one but the Balance Sheet numbers cannot fool.

The alleged mastermind has been using the weekend window in CEFT to siphon funds out. Insiders said he was seen working during weekends. The weekend before a whistle blower had warned the NDB management, this person had executed over 70 transactions of Rs. 5 million each, the cap on CEFT transactions.

Separately, Softlogic Stockbrokers in a Research Update said yesterday NDB has fully provided for the estimated loss, resulting in an unaudited loss after tax of approximately Rs. 4 billion for 1Q2026.

This implies that the net impact of the incident, after accounting for tax effects, is moderate to around Rs. 7 billion, relative to the gross exposure. For context, the bank reported a profit after tax of Rs. 11 billion for CY2025 and Rs. 3.5 billion for 4Q2025.

The bank’s total asset base, estimated at Rs. 990 billion as at 31 March 2026, is expected to see a relatively contained impact of approximately 0.7% as a result of this incident.

Tier 1 capital adequacy is expected to moderate to 9–10% from the current 12.35%, reflecting the combined impact of loss recognition and provisioning related to the fraud exposure. Despite the compression, capital levels are expected to remain above regulatory minimum requirements (8.5%), with a gradual recovery possible as profitability normalizes over the remainder of the year.

The CBSL’s directive to suspend the cash dividend of Rs. 6.46 per share, which was scheduled for payment on 6 April 2026, provides an additional capital buffer by preserving approximately Rs. 2.7 billion of capital that would have otherwise been distributed to shareholders.

Softlogic Stockbrokers also said that importantly, NDB is planning to move swiftly to strengthen its internal control environment, including suspension of implicated personnel, tightening of access controls, right technology, enhanced transaction monitoring, and initiation of an independent forensic audit. These measures, alongside closer regulatory oversight, are aimed at reinforcing governance standards and mitigating the risk of recurrence.

Issuing a brief statement on Monday, the Central Bank said: “NDB has informed the CBSL that it has uncovered an internal fraud that could lead to a significant loss being incurred. The CBSL has also been informed that no customer accounts or deposits have been affected by this fraud.

“The CBSL has carried out a preliminary assessment of the financial impact on the basis of the information provided by NDB and is satisfied that notwithstanding the reported loss, the prudential ratios relating to capital adequacy and liquidity continue to be at levels above the minimum regulatory requirements. The CBSL continues to monitor the developments and will take necessary measures, if required.

“In the event of necessity, NDB will also be able to access temporary liquidity available from the CBSL to banks under the provisions of the relevant laws and schemes already in place,” the banking regulator said.

NDB on Monday confirmed that the incident was confined to a specific operational area and involved certain employees acting in collusion. The matter continues to be treated with the highest level of urgency.

“The bank has acted promptly and decisively upon identifying the issue. All implicated employees have been suspended, while all relevant records and evidence have been secured to support ongoing investigations. The affected operational unit has been placed under separate oversight, supported by revised reporting structures and enhanced access controls across the organisation. Efforts are ongoing – on multiple fronts – to recover the said funds with the support of law enforcement authorities, who have taken action including arrests connected to the matter.”

The Board of Directors will appoint an independent forensic auditor to conduct a thorough and impartial review of the fraud.

The NDB’s Board of Directors comprises Sriyan Fernando (Chairman), Kelum Edirisinghe (CEO), Bernard Sinniah, Sujeewa Mudalige, Kushan D’Alwis, Kasturi Chellarajah, Shweta Pandey, Hasitha Premaratne, Sanjaya Mohottala, and Shanil Fernando.