Prabhu Bank remittance head Sujit Shakya arrested in Rs 1 billion banking fraud; CIB widens probe to senior executives

KATHMANDU: Prabhu Bank has been pushed into deeper controversy after the Central Investigation Bureau (CIB) of Nepal Police arrested the bank’s Remittance Department Head Sujit (Sugen) Shakya for his alleged involvement in banking offences that resulted in losses of more than Rs 1 billion to the institution.

CIB spokesperson and Senior Superintendent of Police Shiv Kumar Shrestha confirmed that Shakya, a resident of Lalitpur Metropolitan City-17, Kanibahal, was taken into custody on Mangsir 24 from Ikhache, Lalitpur, following an arrest warrant issued by the Patan High Court. He is currently under investigation under the Banking Offences and Punishment Act, 2064.

Accused of Misusing Pre-funding Mechanism to Benefit Private Entity

According to the CIB’s preliminary findings, Shakya allegedly misused the legal provision that allows banks to provide pre-funding for remittance transactions. Instead of safeguarding Prabhu Bank’s interests, he reportedly facilitated irregular pre-funding transfers to Prabhu Money Transfer, a company linked to his vested interest group. The funds were advanced without charging interest, in violation of established banking norms.

“During remittance operations, Shakya enabled pre-funding in an irregular manner that caused more than Rs 1 billion in losses to Prabhu Bank. This was done by abusing the legal mechanism and extending benefits to an associated entity,” SSP Shrestha stated.

CIB Expands Probe to CEO, DCEO, and CCO

The scandal has widened significantly, with police arresting the bank’s top leadership. CIB has already placed under investigation:

Ashok Sherchan, Chief Executive Officer (CEO)

Maniram Pokharel, Deputy CEO (DCEO)

Ribas Shrestha, Chief Credit Officer (CCO)

All three are under inquiry for allegedly participating in or enabling the misuse of bank funds and failing to enforce internal controls.

Charges Include Illegal Appointment of “Super Agent”, Misuse of Bank Funds

The CIB statement alleges that Prabhu Bank’s management created an illegal super agent arrangement to conduct remittance operations. The bank reportedly advanced funds to the agent even after remittance activities had been suspended. The funds were allowed to remain in use for an extended period despite clear instructions and regulatory restrictions issued by Nepal Rastra Bank.

According to CIB, this decision inflicted an additional loss of Rs 89,319,986 on the bank.

Investigators say the accused later attempted to conceal the irregularity by disbursing loans and misusing credit facilities—an act that constitutes a serious banking offence.

Guna Airlines Operator Also Arrested

Police have also arrested Rajendra Shakya, operator of Guna Airlines, in connection with the same case. Authorities suspect coordinated involvement among various individuals to exploit Prabhu Bank’s remittance operations for personal benefit.

Banking Sector Alarmed as Probe Deepens

With multiple senior officials in custody and losses surpassing Rs 1 billion, the case has sent shockwaves through Nepal’s banking and financial sector. Regulators and industry analysts warn that the incident underscores systemic weaknesses in governance, compliance, and risk management within financial institutions.

The CIB investigation is ongoing, and further arrests or charges have not been ruled out.