Tuesday Apr 07, 2026
Tuesday Apr 07, 2026
Tuesday, 7 April 2026 02:03 - - {{hitsCtrl.values.hits}}
Banking regulator, the Central Bank of Sri Lanka (CBSL) yesterday said it was satisfied that the alleged Rs. 13.2 billion fraud, described as the largest disclosed in the country, has not affected the core financial strength of National Development Bank PLC (NDB).
NDB last Thursday disclosed that it has detected a fraud perpetrated by a few employees colluding with third parties amounting Rs. 380 million, with further investigations likely to clock the fraud at a much higher value.
Yesterday, the bank made another disclosure valuing the fraud at Rs. 13.2 billion. It appears the funds have been siphoned out of the bank over a period of a couple of years but was detected early last week.
The Colombo Stock Exchange (CSE) imposed a trading halt on NDB shares at 9:02 a.m., which remained in force for the rest of day. The share price closed unchanged at Rs. 130.50.
Issuing a brief statement yesterday, the CBSL 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.
Due to the shocking disclosure, investor sentiment on banking sector stocks was impacted. Five banks figured among the Top 10 negative contributors to the ASPI.
NDB statement
NDB Bank issuing a statement yesterday to assure its customers said the fraud could lead to a Rs. 4 billion loss in the March 2026 quarter.
The statement said:
“NDB Bank wishes to provide a further update on the previously disclosed fraud incident, with a clear assurance to customers and all stakeholders.
“The bank reiterates that no customer balances have been affected by this incident. All customer balances remain intact and secure. The bank continues to operate as normal, with uninterrupted services across all operations. Its financial position remains strong, with sufficient capacity to meet all obligations and support customers.
“Further to the disclosure made on 2 April 2026, the bank confirms 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.”
In the worst-case scenario, the financial impact to the bank is estimated to result in an unaudited Loss after Tax for the quarter ended 31 March 2026 of approximately Rs. 4 billion, after making full provision for the maximum loss expected from this incident.
The bank reported a net Profit After Tax (PAT) of Rs. 11 billion for the year ending 31 December 2025, with a 4Q 2025 net profit of Rs. 3.5 billion. The bank remains financially strong: notwithstanding this impact, the bank’s Common Equity Tier I, Tier I, and Total Capital Adequacy Ratio (CAR) will continue to be above the minimum regulatory requirements of 7%, 8.5%, and 12.5%, respectively. The unaudited Total Asset Base of the bank, which is approximately Rs. 990 billion as at 31 March 2026, would be impacted by 0.7%.
The CBSL has been kept fully informed. It has extended appropriate regulatory support and oversight, within its mandate, to assist the bank in maintaining adequate levels of liquidity and capital to ensure smooth functioning and stability of the bank.
In line with regulatory direction, the cash dividend payable to shareholders on 6 April has been suspended, while the scrip dividend will proceed as planned.
The Board of Directors will appoint an independent forensic auditor to conduct a thorough and impartial review of the fraud.
NDB remains committed to transparency and accountability and will apprise the public as more material information becomes available.
The bank urges the public to avoid speculation or the spread of unverified information. Customers seeking clarification are encouraged to contact their nearest NDB branch, relationship manager, or customer service on 0117448850 for accurate information.
The bank also issued a detailed disclosure to the stock exchange yesterday:
“Further to the disclosure made on 2 April 2026, the Board of Directors of NDB PLC wishes to provide the following update to its shareholders, depositors, customers, and other stakeholders.
Customer balances unaffected
The Board wishes to reiterate that customer balances remain intact as per the investigations carried out. The bank remains well capitalised with sound levels of liquidity. The bank’s day-to-day operations continue without any disruption.
Background
Based on its internal investigation, the bank has now established that the fraud, which was limited to a certain area of operations, to be approximately Rs. 13.2 billion.
The Board and the Management of the bank recognises this is a serious matter and is treating it with the highest urgency with effort being made – on multiple fronts – to recover the said funds with the support of law enforcement authorities.
Prompt decisive actions already taken
The Board wishes to assure stakeholders that it has moved swiftly and decisively since the fraud was detected. The following actions have already been completed:
▪All implicated employees have been suspended and their system access revoked
▪Individuals connected to the fraud have been arrested by law enforcement authorities
▪The affected operational unit has been placed under separate oversight, with new staff and revised reporting lines
▪Additional access controls have been implemented across operations
▪The CBSL has been kept fully informed
▪All transaction logs, records, and evidence have been secured for the ongoing investigation
Independent forensic review to commence
The Board has decided to appoint an independent forensic auditor to conduct a thorough and impartial review of the fraud, its causes, and to ensure that the bank’s systems and processes meet stringent standards. The scope, timeline, and findings of this review will be communicated to stakeholders in due course.
The bank remains resilient and financially strong
Even considering the worst-case scenario, the bank’s financial performance and position will be impacted as follows:
Financial impact: The bank’s unaudited Loss After Tax for the quarter ended 31 March 2026 is estimated to be approximately Rs. 4 billion, after making a full provision for the maximum loss expected from this incident. In addition, during the year ended 31 December 2025, the bank reported a net PAT of Rs. 11 billion, with a net profit of Rs. 3.5 billion for the quarter ended 31 December 2025.
Financial position: The unaudited total asset base of the bank, which is approximately Rs. 990 billion at 31 March 2026 would be impacted by 0.7% due to this incident.
Solvency: Notwithstanding this impact, the bank’s Common Equity Tier 1, Tier 1, and Total CAR will continue to be above the minimum regulatory requirements of 7%, 8.5%, and 12.5%, respectively.
Liquidity: It will have no impact on the bank’s Liquidity Coverage Ratios across both Rupee and All Currency at the said reporting period end. The bank’s access to liquidity as required remains further augmented by access to CBSL facilities.
Regulatory support extended by the CBSL
The bank has received a regulatory statement dated 5 April 2026, issued by the CBSL, extending appropriate regulatory support and oversight, within its mandate, to assist the bank in maintaining adequate levels of liquidity and capital to ensure smooth functioning and stability of the bank.
Regulatory directives
The CBSL has directed the bank to suspend the payment of cash dividend payable to the bank’s shareholders which was scheduled to be directly credited to bank accounts on 6 April 2026 for shareholders who have given banking instructions and dispatched after 21 April 2026 for other shareholders. The scrip dividend will proceed as planned. The CBSL has also directed the bank to restrict discretionary payments and suspend branch expansions. These directives will come into immediate effect and will be in force until specifically varied by a decision of the CBSL.
Commitment to transparency
The Board is committed to keeping shareholders, depositors, and the public fully informed and will provide updates as material information becomes available.
The Board wishes to thank all stakeholders for their continued confidence and support.”
The bank’s Board is composed of Sriyan Fernando (Chairman), Kelum Edirisinghe, Bernard Sinniah, Sujeewa Mudalige, Kushan D’Alwis, Kasturi Chellarajah, Shweta Pandey, Hasitha Premaratne, Sanjaya Mohottala, and Shanil Fernando.
Banking stocks end in red, sector index declines 0.7%
While the Colombo stock market opened the week in green, most banking stocks declined yesterday, with the sector index declining by 0.7% after National Development Bank PLC shares were suspended from trading on its disclosure of a Rs. 13.2 billion fraud.
Commercial Bank was down Rs. 2.50 at Rs. 199.25, Hatton National Bank fell Rs. 4.50 to Rs. 395, and Nations Trust Bank declined Rs. 2.25 to Rs. 286.50. Sampath Bank closed Rs. 0.50 lower at Rs. 146, Seylan Bank ended Rs. 0.50 down at Rs. 102, and Amana Bank fell Rs. 0.10 to Rs. 27.
Only DFCC Bank and Union Bank shares gained. DFCC closed on the up by Rs. 2.50 to Rs. 139.75 and Union Bank ended Rs. 0.1 higher at Rs. 13.
On a day where foreign investors were net sellers, there was buying interest in DFCC Bank and Sampath Bank, according to Asia Securities.
