The financial impact of fraudulent transactions at NDB Bank has escalated to Rs. 13.6 billion, following the conclusion of a final audit report that exposed critical governance failures and vulnerabilities in the institution’s internal control mechanisms. The audit findings were presented and reviewed during a meeting of Parliament’s Committee on Public Finance (COPF), chaired by MP Dr. Harsha de Silva, which summoned officials from the Central Bank of Sri Lanka to evaluate the extensive financial irregularities.
Covering the period from April 1, 2016, to March 31, 2026, the investigation established total fraudulent transactions amounting to Rs. 13,639,664,684. This final figure represents an increase of approximately Rs. 400 million compared to the Rs. 13.2 billion originally disclosed by NDB Bank on April 6, 2026, and stands Rs. 60 million higher than the figure reported on June 26 following an interim audit. According to the bank’s disclosure on September 29, the losses unfolded in phases: Rs. 1.5 billion occurred prior to January 1, 2025, Rs. 9.6 billion took place during 2025, and Rs. 2.5 billion was siphoned during the first quarter of 2026. The audit confirmed that customer accounts remained unaffected throughout the period.
Key Developments
- Critical System Vulnerabilities: Investigators identified failures in processing Common Electronic Fund Transfer (CEFT) transactions, monitoring user activity inside the core banking system, and securing user credentials and access permissions.
- Widespread Control Deficiencies: Serious lapses were uncovered across transaction monitoring, daily account reconciliation, internal auditing, financial compliance, operational risk management, and branch network oversight.
- Inquiry into External Oversight: The committee reviewed findings from the Sri Lanka Accounting and Auditing Standards Monitoring Board and Deloitte Touche Tohmatsu India LLP, questioning the failure of external auditors to detect long-standing irregularities in published financial statements.
- Scrutiny on Senior Leadership: Lawmakers challenged the accountability of senior management regarding risk governance and expressed deep concern over the exposure of public funds, as state and public institutions hold a substantial shareholding in NDB Bank.
- Industry Safeguards: The parliamentary committee assessed the development of a centralized fraud monitoring framework by LankaPay while urging all financial institutions to reinforce independent detection mechanisms.
To prevent future vulnerabilities, the final audit report outlined comprehensive recommendations to overhaul NDB Bank’s operational procedures, internal controls, and overall corporate governance frameworks. The high-level parliamentary session was attended by Deputy Ministers Chathuranga Abeysinghe, Dr. Kaushalya Ariyaratne, and Nishantha Jayaweera, along with several other Members of Parliament.