Sources from the Municipal Treasury Department reveal that the bank's overdraft has now exceeded Rs 1.58 billion, reports Deshaya newspaper.
It is said that this has caused a serious financial collapse.
The increase in the municipal council's spending limit over the past six months and the rapid reduction in revenue collection have caused this situation, reports say.
It is said that SLFP member of CMC, Ramzi Tony had questioned the Mayor Rosy Senanayake about this huge bank overdraft at the monthly meeting of the Council on May 30.
She has stated that her municipality has a fixed deposit of Rs.2 billion and the bank's overdraft has increased as revenue collection has been reduced by 60%.
However, it has been reported that as of June last year, the amount of money deposited in the fixed deposit account amounted to Rs 2.58 billion.