Nation Lanka Finance to be wound up after failed rescue efforts

The Central Bank of Sri Lanka (CBSL) has cancelled the licence of Nation Lanka Finance PLC (NLFP) and initiated the winding-up of the company after a year-long resolution process failed to secure a viable recovery plan or investor.

The licence cancellation took effect from July 3, 2026, marking the final stage of a regulatory intervention that began on July 4, 2025, when the CBSL placed the troubled finance company under administration, under Banking (Special Provisions) Act No. 17 of 2023.

The CBSL said the resolution action was originally triggered by NLFP’s continued violations of the Finance Business Act, despite a series of supervisory and regulatory measures taken by the regulator.

An administrator was appointed in July 2025 to take full control of the company’s assets, operations and affairs while efforts were undertaken to stabilise the institution.

According to the CBSL, multiple resolution strategies were explored over the past year, including attempts to attract investors, facilitate an acquisition by a licensed commercial bank or finance company and revive the company’s operations through structural reforms.

However, the regulator said none of the efforts resulted in a sustainable solution.

“Despite these exhaustive and repeated efforts, a viable and sustainable outcome has not been achieved,” the CBSL said in a statement.

The CBSL said the company’s financial position had continued to deteriorate and that allowing it to remain in its current form would be detrimental to the interests of the depositors and other stakeholders.

Under the winding-up process, the insured depositors will be compensated through the Sri Lanka Deposit Insurance Scheme, which provides coverage of up to Rs.1.1 million per depositor.

The CBSL said the compensation arrangement would enable the full settlement of approximately 99.1 percent of NLFP’s depositors. The remaining 0.9 percent of depositors, whose balances exceed the insured limit, will receive Rs.1.1 million as a partial settlement, with any remaining claims to be pursued through the liquidation process, subject to the statutory order of priority.

The compensation amount will be calculated by aggregating all eligible deposits and unpaid accrued interest held by each depositor as at the date of licence cancellation.

The depositors have until July 2, 2032 to submit claims under the deposit insurance scheme.

The CBSL said the details on the payment mechanism, procedures and commencement date for compensation payments would be announced separately through newspapers and the CBSL’s website.

The regulator also advised the borrowers of NLFP to continue servicing their loans and make payments only to the bank accounts maintained under the company’s name.