Sri Lanka’s National Development Bank PLC has reported a significant internal fraud perpetrated by its employees, resulting in an estimated financial loss of around 13.2 billion rupees. In a recent market announcement, the bank emphasized the seriousness of the situation and stated that it is prioritizing efforts to recover the lost funds with the assistance of law enforcement agencies.
As part of their response, the bank has suspended the employees involved, revoked their access to systems, and coordinated with authorities to arrest those connected to the fraudulent activities. Importantly, the bank reassured customers that their account balances remain unaffected following the investigations.
In a corporate disclosure titled “NDB Addresses Fraud Incident, Estimates Loss and Reinforces Financial Strength and Stability,” the Board of Directors provided an update to shareholders, depositors, customers, and other stakeholders following a previous announcement made on April 2, 2026.
1. Customer Balances Remain Unchanged
The Board confirmed that customer account balances are secure and intact. The bank maintains a strong capital position and adequate liquidity, ensuring that daily operations are running smoothly without interruption.
2. Incident Overview
The internal investigation revealed that the fraudulent activities were concentrated in specific operational areas, leading to a loss of approximately LKR 13.2 billion. The Board and management recognize the gravity of this issue and are addressing it with utmost urgency, collaborating closely with law enforcement to recover the funds.
3. Immediate Actions Taken
The Board has acted swiftly since detecting the fraud. Actions undertaken include:
- Suspending all employees involved and revoking their system access.
- Cooperating with law enforcement to arrest individuals associated with the fraud.
- Placing the affected operational unit under enhanced oversight with new personnel and updated reporting structures.
- Implementing additional access controls across operations.
- Maintaining full communication with the Central Bank of Sri Lanka (CBSL).
- Securing all transaction logs, records, and evidence for the ongoing investigation.
4. Independent Forensic Investigation
The Board has resolved to engage an independent forensic auditor to conduct a comprehensive review of the fraud, examining its causes and ensuring that the bank’s systems and processes adhere to rigorous standards. Updates on the review’s scope, timeline, and findings will be shared with stakeholders as they become available.
5. Financial Resilience
Despite the fraud’s impact, the bank’s financial performance remains robust. The unaudited loss after tax for the quarter ending March 31, 2026, is projected to be around LKR 4.0 billion, reflecting full provisions for the anticipated loss. For the fiscal year ending December 31, 2025, the bank reported a net profit after tax of LKR 110 billion, with a net profit of LKR 3.5 billion for the quarter ending December 31, 2025. The total asset base, approximately LKR 990.0 billion as of March 31, 2026, is expected to be impacted by 0.7% due to this incident. The bank’s capital adequacy ratios will remain above the regulatory minimums.
6. Support from the Central Bank
The bank has received a regulatory statement from CBSL dated April 5, 2026, offering necessary regulatory support to help maintain sufficient liquidity and capital levels, ensuring the bank’s stability and operational continuity.
7. Regulatory Directives
CBSL has instructed the bank to suspend the payment of cash dividends to shareholders that were scheduled for April 6, 2026. However, the scrip dividend will proceed as planned. Additionally, CBSL has mandated the bank to halt discretionary payments and suspend any branch expansions. These directives are effective immediately and will remain in place until further notice.
8. Commitment to Transparency
The Board is dedicated to maintaining transparency and will keep shareholders, depositors, and the public informed with updates as new information becomes available. The Board expressed gratitude to all stakeholders for their continued trust and support during this challenging time.
