The Committee on Public Finance (COPF) has questioned the Central Bank of Sri Lanka over the financial fraud reported at NDB Bank, raising concerns over weaknesses in internal controls, audit mechanisms, and banking sector oversight.

The matter was taken up when the committee met in Parliament on Tuesday (05) under the chairmanship of MP Harsha de Silva.

According to a statement issued by Parliament, Central Bank officials informed the committee that the fraud had directly contributed to a decline in NDB’s share price and credit ratings.

COPF members questioned how the bank’s internal audit committee, external auditors, board audit committee, and the Central Bank’s Banking Supervision Department had all failed to detect the irregularities.

Central Bank officials told the committee that no unusual activity had been flagged during the period in which the fraudulent transactions had allegedly taken place.

The committee also raised concerns over the same audit committee members who served during the fraud period continuing in their roles and effectively overseeing investigations into their own conduct.

During discussions, COPF stressed the need for greater transparency in external audits and stronger accountability within banking institutions.

The committee also focused on outdated banking security standards, warning that existing technological safeguards were insufficient amid evolving cyber threats.

COPF emphasized the importance of maintaining minimum technology and regulatory standards across all banks and highlighted the need to introduce modern artificial intelligence-based systems to prevent future fraud and strengthen overall banking sector security.

Central Bank officials told the committee that discussions are currently underway on introducing new regulations to improve Fraud Management Systems across banks.

The meeting was attended by Deputy Minister Chathuranga Abeysinghe and several MPs, including Ravi Karunanayake and Shanakiyan Rasamanickam. (Newswire)

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