Sri Lanka’s National Development Bank (NDB) suffered financial losses of approximately Rs 13.6 billion from fraudulent transactions, exceeding its initial disclosures by Rs 400 million, according to findings in a final audit report presented to Parliament’s Committee on Public Finance.
The committee, chaired by Member of Parliament Dr Harsha de Silva, said the audit identified a financial impact of Rs 13,639,664,684 over the period from 1 April 2016 to 31 March 2026. The findings emerged after the committee summoned Central Bank of Sri Lanka officials to examine the irregularities and the final audit report relating to the bank.
According to the committee’s statement, the reported amount increased from Rs 13.2 billion disclosed by NDB on 6 April 2026 to Rs 13.6 billion. Compared with the amount disclosed on 26 June, based on an interim report dated 22 June, the final findings identified a further Rs 60 million in fraud-related losses.
A disclosure dated 29 September 2026 attributed approximately Rs 1.5 billion of the financial impact to the period before 1 January 2025, Rs 9.6 billion to 2025 and Rs 2.5 billion to the quarter ending 31 March 2026. The final audit report confirmed earlier disclosures that no customer accounts had been affected by the fraud.
The committee examined findings from investigations conducted by the Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAAMB) and Deloitte Touche Tohmatsu India LLP. Particular attention was given to the failure of external auditors to identify irregularities in the bank’s financial statements, as well as the accountability of senior management for corporate governance and risk management.
The final report identified governance failures involving the processing of Common Electronic Fund Transfer Switch (CEFT) transactions, user-level activities within the bank’s Core Banking System, and the management of user credentials and access information. It also identified shortcomings in transaction monitoring, daily account reconciliation, financial compliance, internal auditing, branch network management and operational risk management.
The committee discussed the implications of the irregularities for public funds and the wider public, noting that a significant proportion of NDB shares are held by institutions representing public and state funds. Its inquiry considered both the financial impact of the fraud and the institutional failures identified in the audit.
The committee also reviewed progress by LankaPay in establishing a centralised fraud monitoring system intended to prevent fraud within the financial system. It emphasised the need to strengthen monitoring arrangements within individual banks so that transactions conducted through their own systems could be more effectively scrutinised.
The final audit report has made comprehensive recommendations to strengthen NDB’s control mechanisms, governance structures and procedures across the operational areas where deficiencies were identified.
