Sri Lanka regulator cancels Nation Lanka Finance license, winding up begins after the Central Bank of Sri Lanka (CBSL) revoked the finance company’s licence, bringing an end to a year-long resolution process aimed at restoring the troubled lender’s financial stability.
Sri Lanka regulator cancels Nation Lanka Finance license, winding up begins after failed rescue efforts
The decision, which took effect on July 3, 2026, marks the final stage of regulatory intervention against Nation Lanka Finance PLC following persistent violations of the Finance Business Act. The Central Bank said it will now proceed with winding up the company under the provisions of the Banking (Special Provisions) Act (BSPA), while activating depositor protection measures through the Sri Lanka Deposit Insurance Scheme.
CBSL first placed Nation Lanka Finance PLC under administration on July 4, 2025, appointing an administrator to assume control of the company’s assets, operations, and affairs. The move came after the finance company repeatedly failed to comply with regulatory requirements despite numerous supervisory actions taken by the central bank.
Over the past year, the Central Bank, acting as the Resolution Authority, explored several options to rescue the institution. These included restructuring initiatives, discussions with licensed commercial banks and finance companies regarding a possible acquisition, and an open invitation for expressions of interest from potential investors. However, according to CBSL, none of these efforts resulted in a viable or sustainable solution.
As a result, the regulator concluded that allowing the company to continue operating would further weaken its financial position and adversely affect depositors and other stakeholders. Consequently, Sri Lanka regulator cancels Nation Lanka Finance license, winding up begins as the final resolution measure under the BSPA.
A key priority following the licence cancellation is protecting depositors. CBSL announced that the Sri Lanka Deposit Insurance Scheme will compensate insured depositors of Nation Lanka Finance PLC up to a maximum of Rs. 1.1 million per depositor. The compensation amount will be calculated after consolidating all eligible deposits and unpaid accrued interest held by each depositor as of the licence cancellation date.
According to the Central Bank, approximately 99.1% of the company’s depositors will receive full reimbursement under the deposit insurance scheme. The remaining 0.9% of depositors will receive the maximum insured amount of Rs. 1.1 million as partial settlement of their deposits, with any remaining balances to be recovered during the liquidation process, subject to the priority of claims established under the Banking (Special Provisions) Act.
CBSL also stated that eligible depositors must submit their compensation claims within six years of the licence cancellation date, with the deadline set for July 2, 2032. Detailed information regarding payment procedures, compensation mechanisms, and the commencement of payments will be announced through national newspapers and the Central Bank’s official website in due course.
Until those announcements are made, depositors have been advised to keep their original deposit certificates and identification documents, including National Identity Cards and relevant registration certificates, readily available to facilitate the claims process.
The Central Bank also issued a separate notice to borrowers of Nation Lanka Finance PLC, instructing them to continue repaying outstanding loans on schedule. Borrowers have been directed to make payments only into bank accounts held in the company’s name and to retain payment records to avoid potential legal action arising from non-payment.
The Sri Lanka regulator cancels Nation Lanka Finance license, winding up begins decision highlights the Central Bank’s continued efforts to safeguard financial system stability while protecting depositors through established resolution and deposit insurance mechanisms. The case also underscores the importance of regulatory compliance within Sri Lanka’s financial sector, particularly as authorities strengthen oversight under the Banking (Special Provisions) Act.