The Nation Lanka Finance administrator extension marks a decisive regulatory step as the Central Bank of Sri Lanka moves to stabilise the troubled finance company and safeguard depositors while advancing its legally mandated resolution framework.
Nation Lanka Finance administrator extension ensures continuity of resolution process
The Central Bank of Sri Lanka (CBSL) has extended the tenure of the Administrator appointed to Nation Lanka Finance PLC (NLFP) by an additional six months, reinforcing its commitment to completing the institution’s resolution in an orderly and legally compliant manner. The extension, which took effect yesterday, allows the regulator to maintain continuity in managing the distressed finance company while safeguarding broader financial system stability.
P.W.D.N.R. Rodrigo, who was initially appointed in July 2025, will continue as Administrator until July 3, 2026. His appointment was made under the Banking (Special Provisions) Act, No. 17 of 2023, a legislative framework introduced to strengthen the Central Bank’s capacity to intervene decisively in failing financial institutions. The CBSL stated that the extended term would provide the Administrator with sufficient time to advance critical elements of the resolution process, including the implementation of an appropriate resolution tool permitted under the Act.
Throughout this extended period, Rodrigo will retain full authority over the assets, operations, and affairs of Nation Lanka Finance. Acting on behalf of the company, he will continue to oversee day-to-day management while submitting regular reports to the Central Bank, ensuring transparency and regulatory oversight remain intact. This governance structure is designed to prevent further deterioration in the company’s position while protecting stakeholder interests.
The regulator emphasised that the decision forms part of its statutory responsibility as the Resolution Authority to protect depositors, creditors, and the integrity of the financial system. By maintaining administrative control, the Central Bank aims to prevent disorderly outcomes that could erode confidence in the non-bank financial sector, particularly at a time when regulatory scrutiny of finance companies has intensified.
In a concurrent advisory, the Central Bank urged all stakeholders with financial obligations to Nation Lanka Finance to continue meeting their contractual commitments without delay. Payments are to be made strictly through bank accounts maintained in the name of Nation Lanka Finance PLC, with stakeholders requested to preserve detailed records of all transactions. This directive underscores the regulator’s intent to ensure orderly cash flows during the resolution phase while minimising operational risk.
The Central Bank first assumed control of Nation Lanka Finance in July 2025 after determining that the company had failed to demonstrate satisfactory progress in restoring its financial health. Despite receiving multiple regulatory concessions and time extensions, the institution was unable to reverse its deteriorating condition, prompting the activation of resolution measures.
At the time of the initial intervention, the regulator cited repeated violations of the Finance Business Act, alongside chronic weaknesses in capital adequacy and asset quality. These deficiencies had raised serious concerns about the company’s viability and its capacity to meet obligations to depositors and other creditors.
Financial disclosures released prior to the takeover painted a stark picture of distress. As at March 31, 2025, Nation Lanka Finance’s total equity had turned negative, recording a deficit of approximately Rs. 718 million. The company also posted a net loss exceeding Rs. 1 billion for the financial year, reflecting sustained operational and financial pressures that had eroded shareholder value.
The gravity of the situation was further underscored by the stance taken by the company’s external auditors. For the preceding financial year, auditors issued a “Disclaimer of Opinion,” citing their inability to obtain sufficient appropriate audit evidence to form an opinion on the financial statements. Such an assessment is widely regarded as a serious red flag within the financial sector, often signalling significant uncertainty surrounding an institution’s financial position.
Nation Lanka Finance had previously sought to strengthen its footing through the amalgamation of Kanrich Finance Ltd in 2023. This consolidation was aligned with the Central Bank’s broader master plan to rationalise and strengthen the non-bank financial institution sector. However, persistent capital shortfalls and liquidity constraints undermined the anticipated benefits of the merger, leaving the company vulnerable to regulatory action.
Ultimately, these ongoing weaknesses compelled the Central Bank to invoke the Banking (Special Provisions) Act to prevent further value destruction and systemic spillover risks. The Nation Lanka Finance administrator extension reflects the regulator’s assessment that additional time is required to execute resolution measures in a structured and legally sound manner, rather than pursuing abrupt or disruptive alternatives.
As the resolution process continues, the Central Bank’s actions signal a firm but measured approach to financial sector oversight. The extension underscores the regulator’s intent to balance depositor protection, creditor interests, and systemic stability while ensuring accountability within Sri Lanka’s non-bank financial landscape.