Rodrigo to helm Nation Lanka Finance as CB-appointed administrator

By Nishel Fernando

The Central Bank (CB) has appointed P.W.D.N.R. Rodrigo as the administrator for the financially distressed Nation Lanka Finance PLC (NLFP), effective July 4, 2025. 

Nation Lanka acknowledged the appointment in a stock filing on the Colombo Stock Exchange (CSE).

The appointment, made under Banking (Special Provisions) Act No. 17 of 2023, grants Rodrigo full control over the company’s assets, business and affairs for an initial six-month term.

The intervention comes as NLFP faces a severe financial crisis, marked by persistent regulatory violations. The CB stated that NLFP has been “continuously violating/contravening the provisions of Finance Business Act No. 42 of 2011”. Key issues cited for the intervention include a “deficient capital level, poor asset quality, continuous losses and failure in repaying the depositors’ money on demand or at maturity, etc”. According to the regulator, the action was taken after the company failed to show “satisfactory progress”, despite being granted “several time extensions” to rectify its condition.

The company’s latest interim financial statements underscore the depth of its problems. As of March 31, 2025, Nation Lanka Finance’s total equity had turned negative, standing at a deficit of Rs.718.47 million. This represents a sharp decline from a positive equity of Rs.439.76 million just a year prior. The company recorded a net loss of Rs.1,158.22 million for the 12 months ending March 31, 2025.

Key performance indicators highlight the depth of the crisis. By March 2025, the company’s core capital adequacy ratio had fallen to a negative 38.32 percent, a significant violation of the 8.5 percent minimum regulatory requirement. The gross nonperforming accommodations (bad loans) ratio surged to an alarming 93 percent as of March 31, 2025, up from 74 percent the previous year. Additionally, total assets decreased to Rs.6.14 billion in March 2025, from Rs.9.45 billion in March 2024.

This follows a reported group loss of Rs.2.26 billion for the fiscal year ended March 31, 2024.

The regulatory action was foreshadowed by a “Disclaimer of Opinion” from the company’s external auditors, M/s. Baker Tilly Edirisinghe & Co., on the annual report for the year ended March 31, 2024. This serious finding indicated that the auditors could not obtain sufficient evidence to form an audit opinion, due to numerous significant issues.

The auditors highlighted a “material uncertainty” that “may cast substantial doubt on the company’s ability to continue as a going concern”. They also noted that the company had failed to perform the necessary due diligence before its July 2023 amalgamation with Kanrich Finance Limited, leading to significant accounting and control issues.

The CB has stated that the appointment of an administrator is a resolution action intended to safeguard the interests of the depositors and creditors and maintain the stability of the financial system. As administrator, Rodrigo will “assume full control over all the assets, rights, business and affairs of NLFP and carry on the business and affairs of the company in the name and on behalf of the company”.

As of March 31, 2025, the total value of deposits held by the company was Rs.4.35 billion. This is a decrease from the previous year, when the company held Rs.5.25 billion in deposits as of March 31, 2024. 

As of March 31, 2025, the top five shareholders of NLFP are Singhe Capital Investment Limited (38.22 percent), Mutual Holdings Limited (17.63 percent), V R Ramanan (13.8 percent), D.S.I. Weerasinghe (7.81 percent) and Dunamis Capital PLC (3.27 percent).

Before the CB took control, V.R. Ramanan served as Non-Executive Chairman and Nirosh Madawala as Acting Chief Executive Officer of NLFP, effective October 30, 2024. NLFP was incorporated in Sri Lanka as a public limited liability company on July 15, 1987. The company’s ordinary shares were listed on the CSE on June 30, 1994. It is regulated under Finance Business Act No. 42 of 2011.

The principal business activities of the company include a range of financial services: lending, which covers financial leases, hire purchase, microfinance, term loans and pawning along with mobilisation of deposits and trading in real estate and property development.

The company has a fully-owned, non-operational subsidiary named Nation Micro Investments Ltd. As of March 2024, the company operated a network of 40 branches and service centres across Sri Lanka.

The CB has advised all stakeholders, including the borrowers, to continue fulfilling their contractual obligations to NLFP on time through the company’s designated bank accounts. For further inquiries, the stakeholders may contact the administrator at 0762050360 or the CB’s Deposit Insurance and Resolution Department.