Primary Dealer License Sri Lanka has become the focus of renewed attention after the Central Bank cancelled Pan Asia Bank’s authorization effective October 23, 2025. The move follows a long-standing suspension linked to controversial treasury bond transactions that caused significant public-sector losses.
Central Bank revokes Primary Dealer License Sri Lanka of Pan Asia Bank
The cancellation of Pan Asia Bank’s Primary Dealer License Sri Lanka marks a decisive regulatory step by the Central Bank of Sri Lanka, closing a chapter that began with one of the country’s most controversial financial scandals. The bank confirmed the revocation in a filing to the Colombo Stock Exchange, stating that the decision will not affect its core banking operations or secondary market trading activities.
According to the disclosure, the license cancellation took effect on October 23, 2025, under the provisions of the Registered Stock and Securities Ordinance and the Local Treasury Bills Ordinance. These laws govern participation in the primary issuance of government securities and empower the Central Bank to regulate and, where necessary, withdraw dealer authorisations.
Pan Asia Bank, formally known as Pan Asia Banking Corporation PLC, emphasised that customers and counterparties should not interpret the revocation as a threat to its financial stability. The bank clarified that its regular commercial banking services, including deposits, lending, and foreign exchange operations, will continue uninterrupted.
A primary dealer license Sri Lanka allows authorised institutions to participate directly in auctions of Treasury bills and bonds issued by the government. Primary dealers play a critical role in managing public debt, supporting market liquidity, and ensuring orderly price discovery in the government securities market. Losing this status removes an institution from the first line of participation in government debt issuance.
The roots of Pan Asia Bank’s license cancellation trace back to August 2017, when the Central Bank suspended the bank’s primary dealer operations. The suspension followed investigations into transactions involving Perpetual Treasuries Ltd, a firm at the centre of the infamous treasury bond scandal that shook Sri Lanka’s financial system.
That scandal, which emerged in 2015 and intensified over subsequent years, exposed serious weaknesses in governance, oversight, and conflict management within the government securities market. Investigations revealed that certain transactions resulted in substantial losses to the state and the Employees’ Provident Fund, the country’s largest retirement savings pool for private-sector workers.
Pan Asia Bank’s dealings with Perpetual Treasuries came under scrutiny as part of a broader probe into irregular bond auctions. Although the bank continued operating in other financial segments, its primary dealer activities remained frozen for more than eight years, effectively placing its license in regulatory limbo.
By formally cancelling the license, the Central Bank has now brought regulatory closure to that prolonged suspension. Market participants view the move as consistent with the regulator’s broader effort to reinforce discipline and accountability in the financial sector, particularly in areas involving public funds and sovereign debt.
Analysts say the decision also reflects the Central Bank’s commitment to restoring confidence in the government securities market. Since the bond scandal, authorities have implemented structural reforms, strengthened auction mechanisms, and tightened eligibility criteria for primary dealers to reduce the risk of market abuse.
For Pan Asia Bank, the loss of its primary dealer license Sri Lanka limits its direct participation in government debt auctions but does not prevent it from trading government securities in the secondary market. The bank can continue to buy and sell Treasury bills and bonds through approved channels, similar to other licensed commercial banks without primary dealer status.
From a systemic perspective, the impact is expected to be contained. Sri Lanka’s primary dealer network has already undergone consolidation, with regulators favouring stronger governance, capital adequacy, and risk management standards. Removing inactive or long-suspended licenses is seen as part of market clean-up rather than a destabilising action.
The episode serves as a reminder of the long regulatory consequences that can follow financial misconduct, even years after the initial events. For investors and institutions alike, it underscores the importance of compliance, transparency, and ethical conduct in markets that directly affect public finances.
As Sri Lanka continues efforts to strengthen financial oversight and rebuild trust, the Central Bank’s decision sends a clear message: participation in sensitive areas such as government securities carries enduring responsibility, and regulatory tolerance has clear limits.