Sri Lankan banks move to calm stability fears after fraud incidents

Sri Lanka’s banking industry yesterday moved to contain rising public concern over recent fraud and cyber-related incidents, asserting that the country’s financial system remains stable and sufficiently capitalised to absorb such shocks without jeopardising depositor funds or broader financial stability.

The reassurance by the Sri Lanka Banks’ Association (SLBA), which represents all licensed commercial banks, comes at a time when a series of high-profile fraud incidents and digital security breaches have intensified scrutiny on governance, operational oversight and risk controls within the banking sector.

While acknowledging growing public anxiety surrounding the incidents, the industry body maintained that the cases were isolated in nature and did not indicate systemic weaknesses across Sri Lanka’s banking system.

“Recent reports of financial fraud and cyber-related incidents have understandably received public attention. Industry leaders and regulators emphasise, however, that the banking sector remains fundamentally strong, resilient, and well equipped to withstand such challenges without compromising its core stability or the security of customer deposits,” SLBA Chairman Sanath Manatunge said. 

The statement also signals growing efforts by the industry to boost confidence in the financial system as regulators and banks face mounting pressure to demonstrate stronger internal controls amid the rapid expansion of digital banking and electronic transactions.

The SLBA said losses arising from recent incidents were being absorbed through institutional capital buffers without any impact on customer deposits, while reiterating that licensed banks continue to maintain capital adequacy and liquidity levels above minimum regulatory thresholds.

The association acknowledged that some of the incidents, including electronic fund transfer-related fraud, had raised legitimate concerns around digital security and operational safeguards. However, it argued that cybercrime risks are increasingly becoming a global challenge confronting financial systems worldwide rather than a vulnerability unique to Sri Lanka’s banking sector.

“Sri Lanka’s banking sector collectively manages trillions of rupees in assets, supported by diversified portfolios and robust governance frameworks. This scale, combined with prudent risk management practices, provides a strong foundation for absorbing shocks while maintaining public confidence,” Manatunge said.

Against the backdrop of rising cyber threats and evolving fraud techniques, banks are also intensifying investments in fraud risk management systems, cybersecurity infrastructure, monitoring mechanisms and forensic audits, while expanding public awareness campaigns on phishing scams, password protection and secure digital payment practices.

The SLBA further noted that Sri Lanka’s banking system continues to operate under close regulatory supervision, with corrective measures already underway expected to further strengthen resilience and restore public confidence in the sector.