The allegations followed Karunanayake's appearance before the panel last week, and he has not been charged by any court.
Sri Lanka's Foreign Affairs Minister Ravi Katunayake today resigned from his portfolio after allegations surfaced that he indirectly benefitted from the Central Bank Treasury Bond scam.
Meanwhile, a no-confidence motion against the Minister which was submitted to Parliament will not be discussed as the Minister had resigned.
Prime Minister Ranil Wickremesinghe welcomed Karunanayake's decision, stating that it shows that the government works honestly and allows the judiciary to operate independently.
Karunanayake resigned following making a special statement in Parliament with regard to the allegations that have been leveled against him.
The central bank has dismissed the opposition's claims.
The Sirisena-Wickremesinghe coalition came to power on an anti-corruption platform in January 2015.
Two and a half years since, there is mounting frustration about the government's perceived lethargy in probing corruption cases, including those involving prominent persons from former President Mahinda Rajapaksa's administration.
The former Finance Minister said that history and time will reveal the truth and his innocence and reveal the truth since he has never committed anything wrong.
"This episode demonstrates the government's and the UNP's inability to manage the politics of anti-corruption", he told The Hindu.
Following a meeting with President Maithripala Sirisena yesterday at the Presidential Secretariat, Foreign Minister Karunanayake is likely to quit his portfolio shortly, according to sources.
"The government has only itself to blame for this situation", he said.