🔍 CoPF Grills CBSL Over Rs. 13.2 Bn NDB Fraud Amid 10-Year Forensic Audit

The Committee on Public Finance (CoPF) subjected the Central Bank of Sri Lanka (CBSL) to intense scrutiny over a Rs. 13.2 billion fraud at National Development Bank PLC (NDB), questioning regulatory oversight lapses and prolonged concealment. • Overall Impact: The massive Rs. 13.2 billion anomaly was linked to Customer Electronic Fund Transfer (CEFT) transactions. Despite the scale, CBSL maintains NDB remains compliant with capital and liquidity requirements under Basel standards after restating its financial statements. • Investigation Scope: An independent forensic audit by Deloitte India commenced on May 2. An interim report is due next week, with the final report scheduled for July 18, 2026. The probe was expanded to cover 10 years as the alleged perpetrator served in the reconciliation unit for over nine years. • Key Concerns: CoPF lawmakers questioned why the multi-billion rupee balance accumulated within short interbank settlement cycles without triggering early warnings. LankaPay noted that such massive balances are difficult to reconcile with normal settlement windows. • Regulatory Response: CBSL clarified that banking supervision is prudential rather than a transaction-level audit, placing primary verification responsibility on NDB's board and auditors. However, following the fraud, weekly monitoring of NDB's liquidity has been enforced alongside stricter internal control directives. • National Context & Supervision: The incident ties directly into broader economic stability, with the IMF's latest May 2026 review flagging the NDB fraud and emphasizing an urgent need to strengthen banking supervision and operational risk frameworks across Sri Lanka's financial sector.