National Development Bank says an internal fraud has caused an estimated Rs13.2 billion loss, triggering urgent recovery efforts, arrests, tighter controls, and intense public scrutiny even as the bank insists customer balances remain protected and daily operations continue without disruption.
Sri Lanka’s National Development Bank PLC has disclosed that an internal fraud involving employees has resulted in an estimated loss of around Rs13.2 billion, sending shockwaves through the financial sector and prompting a halt in trading. In its official market communication, the bank said it had now established the scale of the fraud through internal investigations and was treating the matter with the highest level of urgency. NDB also said it is pursuing recovery of the funds through multiple channels with the backing of law enforcement authorities, while trying to reassure depositors, shareholders, and customers that the institution remains stable.
The bank said employees believed to be involved have already been suspended, their system access has been revoked, and individuals connected to the fraud have been arrested by law enforcement authorities. At the same time, the bank stressed that customer balances remain intact based on investigations completed so far, an assurance likely aimed at preventing panic and preserving confidence in the institution during a highly sensitive period.
The full statement is reproduced below:
NATIONAL DEVELOPMENT BANK PLC – CORPORATE DISCLOSURE
NDB Addresses Fraud Incident, Estimates Loss and Reinforces Financial Strength and Stability
Further to the disclosure issued on April 2, 2026, the Board of Directors of National Development Bank PLC wishes to provide an updated explanation to shareholders, depositors, customers, and other stakeholders on the fraud incident, the estimated loss, the bank’s response, and the measures now being taken to reinforce financial strength, liquidity, governance, and operational stability.
- CUSTOMER BALANCES UNAFFECTED
The Board reiterated that customer balances remain intact according to the investigations carried out up to this point. The bank also emphasized that it remains well capitalised, maintains sound liquidity levels, and continues to function normally on a day-to-day basis without disruption to routine banking operations, customer services, or essential financial activity.
- BACKGROUND
Following its internal investigation, the bank said it has now determined that the fraud was confined to a particular area of operations and that the estimated loss stands at approximately LKR 13.2 billion. The Board and management said they recognize the gravity of the fraud incident and are responding with the highest urgency. Recovery efforts are underway on multiple fronts with the support of law enforcement authorities, reflecting the seriousness of the financial misconduct and the scale of the internal breach.
- PROMPT DECISIVE ACTIONS ALREADY TAKEN
The Board said it moved swiftly and decisively after the fraud was detected, and outlined a list of immediate actions already completed in response to the internal fraud and financial control failure.
All employees implicated in the fraud have been suspended, and their system access has been revoked.
Individuals linked to the fraud have been arrested by law enforcement authorities.
The operational unit affected by the incident has been placed under separate oversight, supported by new staff appointments and revised reporting lines.
Additional access controls have been introduced across operations to strengthen internal safeguards and reduce the risk of further abuse.
The Central Bank of Sri Lanka has been kept fully informed throughout the process.
All transaction logs, records, and evidence relevant to the ongoing investigation have been secured for further examination and legal proceedings.
- INDEPENDENT FORENSIC REVIEW TO COMMENCE
The Board said it has decided to appoint an independent forensic auditor to carry out a full, impartial, and thorough review of the fraud, its causes, and the control failures that made it possible. The purpose of this forensic audit is not only to establish accountability but also to ensure that the bank’s systems, governance structures, and operational processes meet stronger standards in the future. The bank said stakeholders will be informed in due course about the scope, timeline, and findings of the forensic review.
- THE BANK REMAINS RESILIENT AND FINANCIALLY STRONG
NDB said that even under a worst-case scenario, the financial impact of the incident, while serious, would still remain manageable within the broader strength of the bank’s balance sheet and capital position.
Financial Impact: The bank said its unaudited loss after tax for the quarter ended March 31, 2026 is estimated at around LKR 4.0 billion after making a full provision for the maximum expected loss arising from the fraud incident. It also pointed out that for the year ended December 31, 2025, the bank recorded a net profit after tax of LKR 11.0 billion, including a net profit of LKR 3.5 billion for the quarter ended December 31, 2025.
Financial Position: The bank said its unaudited total asset base, estimated at around LKR 990.0 billion as of March 31, 2026, would be affected by only 0.7 percent as a result of this incident.
Solvency: Despite the impact, the bank said its Common Equity Tier 1, Tier I, and Total Capital Adequacy Ratios will remain above the minimum regulatory requirements of 7.0 percent, 8.5 percent, and 12.5 percent respectively.
Liquidity: The bank said the fraud incident will have no impact on its Liquidity Coverage Ratios in both Rupee and all-currency terms as of the reporting date. It added that access to liquidity remains supported further through available facilities from the Central Bank of Sri Lanka.
- REGULATORY SUPPORT EXTENDED BY THE CENTRAL BANK OF SRI LANKA
The bank said it has received a regulatory statement dated April 5, 2026 from the Central Bank of Sri Lanka extending appropriate regulatory support and oversight within its mandate. According to NDB, this support is intended to help the bank maintain adequate liquidity and capital levels while ensuring the smooth functioning, resilience, and stability of the institution during the ongoing fraud investigation and recovery phase.
- REGULATORY DIRECTIVES
The Central Bank has directed NDB to suspend the payment of the cash dividend that had been scheduled to be credited directly to shareholder bank accounts on April 6, 2026 for those who had provided banking instructions, and to be dispatched before April 21, 2026 for other shareholders. However, the scrip dividend will proceed as planned. The Central Bank has also directed the bank to restrict discretionary payments and suspend branch expansion activities. These regulatory directives took immediate effect and will remain in force unless varied by a further decision of the Central Bank of Sri Lanka.
- COMMITMENT TO TRANSPARENCY
The Board said it remains committed to transparency and to keeping shareholders, depositors, customers, and the wider public fully informed as material developments emerge. It concluded by thanking all stakeholders for their continued confidence, patience, and support during a period that has now become one of the most serious internal fraud crises faced by the bank in recent times.
