-By Financial Reporter
(Lanka-e-News -21.March.2025, 11.10 PM) Hatton National Bank (HNB), once the pride of Sri Lanka’s financial sector, is now doing the corporate equivalent of checking its pockets for loose change. With billions in bad loans, questionable lending practices, and a loan book that looks more like a “who’s who” of financial disasters, HNB is teetering on the edge of a banking catastrophe.
Enter Nawaloka Hospitals, one of HNB’s many “valued” clients. Nawaloka, which already owed a staggering Rs. 0.63 billion to HNB, somehow found the funds to buy a fancy AI-powered MRI machine worth USD 1.3 million (Rs. 1.33 billion)—a machine so advanced, it can probably detect financial stupidity in real-time.
This purchase comes at a time when HNB is struggling to recover payments from Nawaloka, which has total debts of Rs. 2.3 billion spread across multiple banks. While HNB had tried to auction off Nawaloka’s hospital premises in Colombo 02, the hospital managed to get a temporary court order blocking the auction—essentially saying, "Sorry, we can’t pay, but we’ll keep the building, thanks!"
Nawaloka isn’t the only problem on HNB’s books. The bank has also handed out large loans to Softlogic PLC, which is now itself struggling under the weight of foreign borrowings and financial mismanagement. It’s like HNB had a "give loans to companies in trouble" policy—and they stuck to it religiously.
Then there’s the Harry Jayawardhan saga, where HNB reportedly issued unauthorized loans for travel-related businesses and even provided fake letters of credit to facilitate some very sketchy transactions. The situation has gotten so bad that regulators are now investigating whether HNB was running a bank or a very expensive financial illusion.
For HNB depositors, things are looking… well, concerning. Economic experts warn that if HNB is forced to write off these bad loans as irrecoverable debts, the bank may struggle to repay depositors’ money.
In other words, if you have savings at HNB, you might want to start casually glancing at other banks.
Just when HNB hoped to seize assets and recover some of its bad loans, the Sri Lankan government stepped in to help… not the bank, but the defaulters. The Cabinet, led by Ranil Wickremesinghe, decided to suspend ‘Parate executions’, effectively preventing banks from auctioning off properties to recover bad loans.
Two days later, the Court of Appeal issued an interim order preventing HNB from taking legal action against Nawaloka—meaning that while the hospital continues to expand its medical equipment collection, HNB gets to sit and watch its money vanish into the abyss.
With bad debts piling up, investigations into fake financial documents, and depositors getting nervous, HNB is at serious risk of becoming Sri Lanka’s next big financial collapse. If the situation isn’t addressed soon, it could lead to:
Higher interest rates (because someone has to pay for HNB’s mistakes).
Less credit for SMEs (because big corporations have already maxed out HNB’s generosity).
A total loss of confidence in the banking sector (because depositors don’t like playing Russian roulette with their savings).
For now, HNB’s leadership insists that everything is under control—which, historically speaking, is exactly what people say right before things go very, very wrong.
-By Financial Reporter
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by (2025-03-21 20:20:37)
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