Shanker Group under scanner: Rs 76 billion bank exposure, Rs 100 billion credit limit raise systemic concerns

KATHMANDU: Nepal’s financial and industrial landscape has been jolted by revelations surrounding the Shanker Group, which holds an estimated NPR 76 billion in bank loans out of an approved credit limit of nearly NPR 100 billion, as authorities intensify a high-profile money laundering investigation linked to alleged misuse of public company funds.

The case escalated after the arrest of businessman Dipak Bhatt, followed by the detention of Shanker Group Chairman Shanker Lal Agrawal and Vice Chairman Sulabh Agrawal. Authorities have also issued an arrest warrant against Sahil Agrawal, another key member of the group.

Massive Banking Exposure Across 18 Commercial Banks

According to high-level financial sources, the Shanker Group has borrowed from 18 out of Nepal’s 20 commercial banks, excluding only NIC Asia Bank and Prime Commercial Bank. The group’s borrowing ranges from as high as NPR 8 billion from a single bank to as low as NPR 850 million.

Nepal’s central bank, Nepal Rastra Bank, has initiated inquiries into the group’s loan portfolio, given its systemic importance. With total banking sector credit exceeding NPR 5.8 trillion, the Shanker Group alone accounts for approximately 1.3 percent of total lending—raising concerns over concentration risk.

Despite the scale of exposure, sources indicate that the group has so far maintained regular principal and interest repayments, suggesting no immediate liquidity crisis.

Corporate Structure and Aggressive Expansion

The group operates through multiple entities, including Jagdamba Holdings (under Sulabh Agrawal) and Jagdamba Group (under Sahil Agrawal). Its flagship Jagdamba Steels commands an estimated 35 percent market share in Nepal’s steel industry.

The conglomerate has aggressively expanded across sectors—steel, cement, hydropower, automobiles, insurance, hospitality, FMCG, and electronics. Key borrowing entities include Jagdamba Steel, Shaurya Cement, Riddhi Siddhi Cement, Jagdamba Motors, Jagdamba Foods, Jagdamba Spinning Mills, and hospitality ventures.

Jagdamba Steel alone recorded a कारोबार of NPR 49.74 billion in FY 2020/21, though recent economic slowdown has reportedly affected its performance.

Linkages and Joint Ventures

Several of the group’s major cement ventures involve other prominent industrial houses. Shaurya Cement includes investment from the Golchha Group and Ambe Group, while Riddhi Siddhi Cement is primarily backed by the Ambe Group—one of Nepal’s pioneer steel traders.

Bankers say such joint ownership structures may cushion operational risks, even as investigations target key promoters.

Spillover Risks and Market Sentiment

Financial analysts warn that if the ongoing probe leads to asset freezes, management disruption, or operational constraints, it could impact debt servicing cycles and elevate non-performing loans (NPLs) across the banking system.

However, banking insiders remain cautiously optimistic. “Even in a worst-case scenario, the impact would raise bad loans by around 1.3 percent, which is manageable,” a senior banker said, noting that most businesses continue to operate through professional management teams and partners.

Regulatory History and Policy Backdrop

The case also brings renewed attention to past regulatory tensions. Maha Prasad Adhikari had previously attempted to tighten credit flows to large business houses, including the Shanker Group, through capital and working capital directives. However, sources suggest such efforts faced political resistance at the time.

The group had also been preparing to launch IPOs for Jagdamba Steel and its Hilton Hotel project—moves now likely to face delays amid regulatory scrutiny.

A Defining Moment for Nepal’s Financial Governance

The unfolding developments highlight deeper structural issues in Nepal’s credit ecosystem, including corporate governance, regulatory enforcement, and political-business linkages.

As investigations progress, the case is being closely watched by policymakers, investors, and international observers, as it could redefine risk assessment, lending practices, and financial transparency standards in Nepal’s evolving economy.