Sri Lanka’s central bank is in the process of finalizing an agreement with the National Development Bank (NDB) to enlist the services of an international firm for a detailed forensic audit. This decision comes after NDB revealed an internal fraud amounting to 13.2 billion rupees last month.

The Central Bank of Sri Lanka (CBSL) stated that the audit will not only investigate the fraud itself but will also evaluate any lapses in compliance with regulatory standards concerning control, oversight, and governance during the period when the fraudulent activities occurred. The audit is expected to begin soon, and CBSL plans to maintain direct communication with the auditors as deemed necessary throughout the process.

Former finance minister Ravi Karunanayake has criticized CBSL for its failure to adequately oversee the situation. In response, CBSL has instructed NDB to promptly implement measures to enhance its internal controls. Additionally, NDB has been tasked with commissioning an independent third-party review to evaluate the effectiveness of its policies, procedures, and internal control systems.

CBSL is actively monitoring the situation involving NDB on a daily basis. It reassured the public that NDB continues to comply with all regulatory capital and liquidity requirements. The central bank is in ongoing discussions with NDB’s board and management, as well as other key stakeholders, and is prepared to take further actions to protect depositors’ interests and maintain financial system stability. There is no indication that any other regulated financial institution has incurred losses related to the NDB incident, and the public is urged to disregard any misleading statements suggesting otherwise.