Kathmandu: Ashok Sherchan, the Chief Executive Officer of Prabhu Bank, who had been arrested on allegations of loan misuse and financial losses caused by the failure to collect interest on advance settlements of remittance payments, was released from police custody last Friday.
Nepal Police’s Central Investigation Bureau (CIB) had registered a case of banking offenses and launched an investigation by arresting Sherchan along with Deputy CEO Maniram Pokharel and three other individuals. Acting on instructions from the Office of the Special Public Prosecutor, the CIB released Sherchan last Friday.
The Office of the Public Prosecutor decided not to seek an extension of Sherchan’s detention, arguing that the allegations were financial in nature and that the investigation could proceed without keeping him in custody.
However, police officers involved in the investigation have expressed dissatisfaction with the decision, saying the directive to release Sherchan came before the inquiry had been completed.
Investigators had argued last Friday that Sherchan should be kept in custody for an additional five days, citing the seriousness of the alleged banking offense and the fact that significant aspects of the investigation were still pending. The CIB said many technical issues were yet to be examined, documents required further analysis, and additional questioning was necessary. There were also concerns that evidence could be tampered with if Sherchan remained outside custody.
Despite these arguments, the Office of the Special Public Prosecutor concluded that the CIB had not presented sufficiently strong grounds to justify continued detention and instructed that the investigation continue with Sherchan out of custody, leading to his release.
“We were preparing to complete the investigation quickly and submit our report in line with the court’s order,” a CIB source told Clickmandu. “But once the prosecutor’s office instructed us to release him without fully appreciating the gravity of the case, we were compelled to comply.”
In its decision, the Special Public Prosecutor’s Office stated that statements from the accused had already been recorded and that the interest related to the advance settlement of remittance payments by Prabhu Money Transfer had reportedly been settled. Taking into account the health of the accused as well, the office decided the investigation should continue without detention.
Following his release, Sherchan has sought to return to his role as CEO of Prabhu Bank. However, the ongoing CIB investigation appears to have complicated those plans.
After Sherchan’s release on Friday, Prabhu Bank’s board of directors held day-long discussions on Sunday, including deliberations on the legal process surrounding his possible reinstatement. Sherchan himself, who remains suspended, attended the discussions and made it clear that he was ready to resume his duties.
“Ashokji wants to return to work immediately,” a member of the bank’s board told Clickmandu. “But we are unsure about what decision would be appropriate at this point.”
The board has sought guidance from senior officials at Nepal Rastra Bank (NRB), the country’s central bank, on whether Sherchan should be reinstated.
Central bank officials have advised against reinstatement unless the investigation is completed and the CIB formally states that there is insufficient evidence for further action. They cautioned that a situation where Sherchan is reinstated only to be re-arrested days later would not reflect well on either the bank or the regulator.
“Our advice is to take a cautious decision,” a NRB source told Clickmandu. “If the CIB concludes its investigation and clears Sherchan due to lack of evidence, reinstatement can be considered. Until then, it would be prudent to move forward in consultation with the investigators.”
In the absence of a positive signal from the central bank, Prabhu Bank’s board decided on Sunday not to lift Sherchan’s suspension. According to sources, Sherchan did visit the bank on Sunday and spent around four hours there, from about 1 pm to 5 pm. However, after failing to receive a ‘green signal’ from NRB, he did not return on Monday.
“The Prabhu Bank board is capable of deciding what is best for the institution,” a senior executive director at NRB told Clickmandu. “We are mindful that sensitive institutions like banks should not appear to be playing a game of cat and mouse between regulators and law enforcement.”
Meanwhile, informal discussions have continued between officials of the CIB and NRB. After CIB officials reiterated their concerns about the prosecutor’s decision and confirmed that the investigation would proceed, the central bank chose not to endorse Sherchan’s reinstatement.
“Police have a legal mandate of up to 60 days to complete an investigation,” a Prabhu Bank director said, citing guidance from the central bank. “Given that, it is better not to reinstate Sherchan until that period has passed.”
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