-By LeN Economic Correspondent
(Lanka-e-News -11.June.2025, 11.30 PM) In the sweltering morning heat of Colombo’s Galle Face Green, where joggers, ministers, and stray dogs coexist in a rhythm uniquely Sri Lankan, one scene stood out in stark contrast yesterday: a tearful couple clutched each other outside the gates of the Presidential Secretariat, pleading not with placards or slogans — but with tears, sobs, and a single demand.
“Why has Hatton National Bank destroyed our lives?”
It is a question now echoing through social media, banking WhatsApp groups, and even within Parliament’s cooperative oversight subcommittee — for this seemingly isolated domestic drama is now turning into a national reckoning for one of Sri Lanka’s oldest and most influential private banks.
Hatton National Bank — or HNB, as it prefers to be known in its slick, investor-facing brochures — is no stranger to praise. It has for decades styled itself as a pillar of stability amidst Sri Lanka’s cyclical economic chaos. But now, the bank is being accused of behaving more like a private moneylender than a licensed commercial bank, circumventing regulations and weaponising contracts.
And in this case, allegedly doing so without even the decency of following due legal process.
The tearful couple - claim that their modest family business was brought to ruin after HNB moved to seize their property without judicial authorisation.
“We were never served a court notice. There was no hearing, no warning,” victim sobbed before reporters. “One day, we received a letter. The next, our account was frozen. And last week, a bank officer showed up with police — not a court order — demanding possession of our houe, even though we continue o paying the loan arrears. ”
According to the victim and his wife, they had taken out a Rs. 4 million SME loan during the COVID recovery period under the Central Bank’s refinance facility. The loan was current until mid-2024, when Sri Lanka’s power cuts, inflation, and import restrictions strangled their supply chains. They requested restructuring — something the Central Bank had explicitly allowed in its moratorium framework.
Instead, HNB allegedly:
Charged “penalty interest” in excess of 25% per annum.
Classified the loan as “non-performing” without formal arbitration.
Issued a “recovery order” without High Court approval.
Moved to freeze the account and assets without notice.
Legal experts are now questioning whether HNB acted under authority of court, or under what one Colombo lawyer termed, “a mafia-style banking order dressed in corporate formality.”
“It is not the job of banks to destroy their customers,” said Dr. Senaratne, a banking law expert at Colombo. “When a regulated entity uses its financial muscle to unilaterally punish borrowers without legal process, that is not banking — it’s corporate vigilantism.”
Senaratne’s concern echoes a broader unease about Sri Lanka’s weakened financial regulatory enforcement, especially after the economic crisis of 2022-23, during which banks were granted wide latitude to restructure, recover, and ‘self-manage’ their bad loan books — often at the expense of procedural fairness.
And HNB, being one of the largest privately owned players in the domestic market, has allegedly taken more liberty than most.
In April 2023, the Central Bank of Sri Lanka (CBSL) issued explicit circulars instructing banks to prioritise voluntary settlements, extend grace periods, and initiate litigation only as a last resort. Furthermore, CBSL guidelines required that any forced recovery must proceed via court order, under supervision, and with transparent notification.
Yet, in the victim’s’ case — and at least a dozen similar ones now circulating on legal blogs and X (formerly Twitter) — HNB is alleged to have operated like a shadow bailiff, sidestepping the very regulations designed to prevent financial harassment.
An anonymous CBSL source admitted, “We have received complaints. The Monetary Board is aware. But in practice, enforcement takes time, and banks often exploit the grey areas.”
Translation: The rules exist, but the watchdog is asleep.
Perhaps most telling is the absolute silence from the Sri Lanka Banks’ Association (SLBA) — the so-called ‘gentleman’s club’ of domestic finance, known more for its cocktail evenings than regulatory introspection.
Despite the growing public outcry, SLBA has neither condemned nor clarified HNB’s conduct.
As one insider quipped, “They’ll issue a statement once the headlines die down — not before.”
To its shareholders, HNB boasts a robust balance sheet, record post-crisis recovery profits, and a glowing ESG portfolio.
But as legal experts warn, those profits may have been extracted through quiet abuses — charging inflated compound interest, imposing illegal recovery fees, and bypassing moratoria protections.
“If what is alleged is true, it raises serious questions about systemic misconduct,” said Amal Jayasinghe, a former CBSL Deputy Governor. “One incident is bad enough. A pattern? That’s regulatory failure.”
As for Victims, they left their written complaint — four pages of anguish, affidavits, and photocopies — with an officer at the Presidential Secretariat.
Will it make its way to the President’s desk? That depends on whether the Presidential Office sees private banking injustice as worthy of political attention.
But if public fury continues to mount, the NPP government may be forced to act — especially if more victims come forward with similar tales of HNB’s extrajudicial behaviour.
In a country reeling from economic collapse, where state assets were sold off and public trust in institutions evaporated, this scandal once again raises the timeless question: Who watches the banks?
Private banks like HNB claim to be the engines of recovery. But if those engines crush the very people they claim to uplift — shop owners, small businesses, the middle class — then perhaps it is time to revisit the script.
Sri Lanka, after all, has no shortage of crises. But when its citizens start crying in front of the Presidential Secretariat, perhaps it's not just economic policy that’s broken — but institutional morality itself.
HNB has not issued a public response.
The CBSL has “acknowledged receipt” of complaints but has not confirmed any investigation.
Parliament’s finance committee is said to be reviewing the matter next week.
The Weeraratnes’ shop remains padlocked.
In a nation that once defaulted on its debt to save its sovereignty, perhaps now it must save its citizens from the banks.
Editor’s Note: The Lanka-e-News Political Debate is a daily series raising unfiltered questions about policy, power, and representation. Tomorrow’s topic: “Exposing land registrie’s corruption“ Stay tuned.
-By LeN Economic Correspondent
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by (2025-06-11 23:17:15)
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