The Central Bank of Sri Lanka (CBSL) says that it continues to closely monitor on a day-to-day basis developments relating to National Development Bank PLC (NDB) following the disclosure of an internal fraud. 

Issuing a statement, it revealed that NDB, in consultation with CBSL, is finalising arrangements to engage a leading international firm with experts from overseas to conduct a comprehensive forensic audit into the incident. 

“The scope of this audit will, apart from matters directly related to the commission of this fraud, also fully address and assess any failures on compliance with regulatory requirements on control, oversight and governance during the period in which the fraudulent transactions took place,” it said. 

The forensic audit is expected to commence shortly, and its progress, including any interim findings as well as the final report, will be submitted directly to CBSL who will directly engage with the auditors to the extent considered necessary during the audit. 

In parallel, CBSL said it has directed NDB to take immediate and expeditious measures to strengthen its internal controls and governance processes, with particular focus on addressing identified lapses. 

NDB has also been required to commission an independent third-party review to assess the adequacy and effectiveness of its policies, procedures, systems, and internal controls. 

The central bank emphasised that NDB continues to meet all regulatory requirements relating to capital and liquidity and that CBSL remains in close and continuous engagement with the Board and management of NDB, as well as other relevant stakeholders, and stands ready to take any further measures necessary to safeguard the interests of depositors and ensure the stability of the financial system. 

“There is no evidence of any other regulated financial institution suffering any loss arising from the incident at NDB, and the public is requested not to be misled by any statements to the contrary made in various fora,” it said.