No evidence other banks impacted by NDB’s Rs. 13.2 b fraud: CBSL

• Says leading international forensic audit firm to commence probe ‘shortly’ and report to CBSL
• Scope of audit includes assessing any failures pertaining to regulatory compliance on control, oversight and governance 

The Central Bank of Sri Lanka (CBSL) last Friday issuing its third statement on the Rs. 13.2 billion fraud-hit National Development Bank PLC (NDB) said there was no evidence to suggest other banks or financial institutions have been impacted by the scandal.

The banking regulator said that a leading international firm will conduct a comprehensive audit and report directly to the CBSL. 

“The scope of this audit will, apart from matters directly related to the commission of this fraud, also fully address and assess any failures on compliance with regulatory requirements on control, oversight, and governance during the period in which the fraudulent transactions took place,” the CBSL statement said. 

It further said that there is no evidence of any other regulated financial institution suffering any loss arising from the incident at NDB and the public are requested not to be misled by any statements to the contrary made in various fora.

The CBSL said:

“The CBSL continues to closely monitor on a day-to-day basis developments relating to NDB following the disclosure of an internal fraud.

The CBSL wishes to inform the public that NDB, in consultation with the CBSL, is finalising arrangements to engage a leading international firm with experts from overseas to conduct a comprehensive forensic audit into the incident. The scope of this audit will, apart from matters directly related to the commission of this fraud, also fully address and assess any failures on compliance with regulatory requirements on control, oversight and governance during the period in which the fraudulent transactions took place. 

The forensic audit is expected to commence shortly, and its progress, including any interim findings as well as the final report, will be submitted directly to the CBSL, who will directly engage with the auditors to the extent considered necessary during the audit.

In parallel, the CBSL has directed NDB to take immediate and expeditious measures to strengthen its internal controls and governance processes, with particular focus on addressing identified lapses. NDB has also been required to commission an independent third-party review to assess the adequacy and effectiveness of its policies, procedures, systems, and internal controls.

NDB continues to meet all regulatory requirements relating to capital and liquidity. The CBSL remains in close and continuous engagement with the Board and management of NDB, as well as other relevant stakeholders, and stands ready to take any further measures necessary to safeguard the interests of depositors and ensure the stability of the financial system. There is no evidence of any other regulated financial institution suffering any loss arising from the incident at NDB and the public are requested not to be misled by any statements to the contrary made in various fora.”

The CBSL issued its first statement on 6 April followed by its second on 10 April.

Daily FT exclusively reported that audited 2025 accounts showed ‘Other Financial Assets Gross’ at Rs. 12.22 billion, nearly four times higher than Rs. 3.1 billion in 2024, while the standard average in previous years had been Rs. 1.4 billion, amid allegations that an NDB insider used CEFT to siphon Rs. 13.2 billion, with good governance activists claiming the incident reflects fraud and a clear failure of controls and monitoring oversight by finance, internal audit, top management, and, overall, the Board risk and audit committees (https://www.ft.lk/front-page/NDB-Board-gets-flack-for-ignoring-high-Rs-12-3-b-receivables-arising-from-CEFT-deals/44-790631).