KATHMANDU, Dec 1: The Central Investigation Bureau (CIB) of Nepal Police on Sunday arrested Chief Executive Officer of Prabhu Bank, Ashok Sherchan, on charges of banking fraud.
The CIB acted on an arrest warrant issued by the Patan High Court under the Banking Offense and Punishment Act, 2007. The court granted CIB the detention order based on earlier investigations which pointed towards Sherchan’s alleged role in misappropriation. CIB spokesperson Shiva Kumar Shrestha confirmed that the police detained Sherchan from the bank’s central office in Babarmahal and began fresh interrogation.
Investigators accused Sherchan of violating directives of Nepal Rastra Bank and existing banking laws by illegally issuing loans to several firms, thereby jeopardizing the bank’s financial health. Authorities also alleged that he misused the bank’s financial resources while approving the loans.
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Along with Sherchan, the CIB also arrested Deputy CEO Mani Ram Pokharel and Chief Credit Officer Rivas Shrestha. The bureau charged the trio with fraudulent transactions involving tens of millions of rupees through loans disbursed in the names of multiple companies to conceal financial crimes. The CIB alleged that Sherchan alone misappropriated Rs 980 million.
CIB had earlier raided the bank’s head office in Bijuli Bazar on November 8 and seized documents related to suspicious financial transactions.
The latest move follows the arrest of Prabhu Group chairperson Devi Prakash Bhattachan on October 28 in connection with the same case.
Kusum Lama, chairperson of Prabhu Management, had filed complaints against them for embezzlement. However, Lama himself is also under CIB investigation over his alleged involvement in offenses under the Nepal Rastra Bank Act, 2002, based on complaints filed by Thakur Prasad Manandhar and others.
The investigation found that Prabhu Management Pvt Ltd illegally received remittance funds and reconciled them through the hundi system using accounts at Citizens Bank. Authorities said suspicious deposits appeared during remittance transactions.
The CIB further revealed that Prabhu Management and Prabhu Money Transfer Pvt Ltd signed an agreement in December 2012 to distribute remittance payments through cooperatives. Investigators alleged that the companies violated the Nepal Rastra Bank Remittance Regulations, 2022 and failed to reimburse several cooperatives after collecting remittance funds.
More than three dozen cooperatives from different parts of the country have filed complaints, claiming financial losses due to the alleged embezzlement.
Meanwhile, the arrests come as a Bangladeshi audit firm has begun reviewing the loan portfolios of Nepal’s 10 largest commercial banks to comply with conditions set by the International Monetary Fund under its Extended Credit Facility program.
