Sri Lanka’s NDB says loss from internal fraud Rs13.2bn, a disclosure that has sent ripples through the banking sector while the lender reassures customers that their deposits remain unaffected. The incident underscores the importance of internal controls and regulatory oversight in maintaining trust in financial institutions.
NDB confirms Rs13.2bn fraud, assures customer balances remain intact
National Development Bank PLC (NDB) confirmed that a fraud committed by employees resulted in a loss of approximately Rs13.2 billion. The bank stated that it has acted swiftly to suspend the implicated staff, revoke their system access, and collaborate with law enforcement authorities, who have arrested those involved.
In its market filing, NDB highlighted that customer balances remain intact, and day-to-day operations continue without disruption. The bank emphasized that its capital position and liquidity remain strong, ensuring that the incident does not undermine its financial stability.
The internal investigation revealed that the fraud was confined to a specific operational unit. Following detection, the bank implemented additional access controls and placed the affected division under new oversight. Transaction logs, records, and other critical evidence have been secured for ongoing forensic review.
The Board of Directors announced plans to appoint an independent forensic auditor to conduct a thorough review of the fraud, its causes, and systemic vulnerabilities. The audit will aim to enhance operational controls and safeguard against future incidents.
Financially, the impact of the fraud has been provisioned in the bank’s unaudited accounts. The Loss After Tax for the quarter ended 31 March 2026 is estimated at Rs4 billion, after making full provisions. By comparison, NDB reported a net profit after tax of Rs11 billion for the year ended 31 December 2025. The bank’s total asset base of approximately Rs990 billion will see an estimated 0.7% reduction due to this incident.
Despite the setback, the bank’s solvency ratios remain above regulatory minimums, with Common Equity Tier 1, Tier I, and Total Capital Adequacy Ratios exceeding 7%, 8.5%, and 12.5%, respectively. Liquidity coverage ratios also remain unaffected, supported further by access to Central Bank of Sri Lanka (CBSL) facilities.
Regulatory support has been extended by the CBSL to ensure operational continuity. The central bank has issued directives suspending cash dividends, discretionary payments, and branch expansions until further notice. Scrip dividends will proceed as planned. CBSL’s involvement highlights its role in stabilizing the financial system during unexpected events.
NDB has stressed its commitment to transparency, assuring shareholders, depositors, and the public that updates will be provided as investigations progress. The bank expressed gratitude to stakeholders for their continued trust while taking decisive actions to recover funds and strengthen internal governance.
This incident at NDB serves as a reminder of the critical importance of robust internal controls, oversight mechanisms, and the proactive role of regulatory authorities in safeguarding both customer interests and financial stability. With swift corrective measures, ongoing forensic audits, and regulatory support, the bank aims to restore full confidence and prevent recurrence.