Kathmandu: An ongoing investigation into alleged loan misuse at Prabhu Bank has taken a dramatic turn after a senior government prosecutor was transferred, raising concerns about possible interference in the case involving former CEO Ashok Sherchan.
The Office of the Attorney General has reassigned Deputy Attorney General Mohan Sagar Basyal from the Special Government Attorney’s Office following controversy over his role in the case. The Central Investigation Bureau had been investigating multiple accusations related to alleged loan misuse and financial irregularities involving Sherchan and other senior bank officials.
According to sources, while the investigation was ongoing, a CIB team had taken Sherchan to the Special Government Attorney’s Office to seek an extension of custody for further inquiry. However, instead of forwarding the request to the court, Basyal reportedly ordered the release of Sherchan and others without considering the police recommendation.
Sherchan, who had been arrested on charges including loan misuse and failure to recover due interest linked to remittance advance settlements, was released on Poush 11 following the prosecutor’s directive. The CIB had filed a banking offence case and detained five individuals, including Deputy CEO Maniram Pokharel, but were compelled to release them after the order.
Investigators allege that around NPR 660 million in advance payments made to Prabhu Management for remittance services were not settled as per the agreement, and interest was not recovered, causing financial loss to the bank. The case also involves allegations of financial manipulation during regulatory scrutiny by Nepal Rastra Bank.
Further findings suggest that loans were routed through multiple entities, including companies linked to businessman Rajendra Shakya and Guna Airlines, to artificially settle liabilities. Investigators found that a loan of NPR 150 million approved for Guna Airlines was quickly transferred to Prabhu Management to settle outstanding dues, bypassing proper procedures.
Additionally, funds were reportedly layered through entities such as Divya Securities before reaching final recipients, indicating possible attempts to obscure the transaction trail.
Following these developments, the government transferred Basyal on Chaitra 19 under provisions of the Government Attorney Regulations 2077. He has been reassigned to the Attorney General’s Office, effectively removing him from the ongoing investigation.
The move is being viewed as an attempt to ensure an independent and uninterrupted investigation into one of the most significant recent cases of alleged financial misconduct in Nepal’s banking sector.
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