Digital Governance Failure: Prabhu Bank CEO Arrested in Banking Offense Case
Prabhu Bank CEO Arrested
30th November 2025, Kathmandu
The arrest of Prabhu Bank’s Chief Executive Officer (CEO), Ashok Sherchan, alongside two other high-ranking employees, has sent shockwaves through the entire Nepali financial sector.
Prabhu Bank CEO Arrested
The Prabhu Bank CEO arrested event involves allegations of massive loan misuse, specifically banking offense charges. This dramatic development, spearheaded by the Central Investigation Bureau (CIB), underscores a critical failure in internal control and digital governance within the banking system.
The arrests signal a strong new focus on accountability. They highlight how crucial advanced digital forensic analysis is for uncovering complex financial malfeasance that often lies hidden within core banking data.
High-Profile Employees Caught in CIB Net
CEO Sherchan was arrested directly from the central office, a move that publicly rattled the industry. Deputy CEO Maniram Pokharel and Chief Credit Officer Riwaj Shrestha were also detained.
The CIB acted under the order of the Patan High Court. They face charges under the Banking Offense and Punishment Act, 2064, and the Nepal Rastra Bank Act, 2058.
The charges revolve around the alleged misuse of crores of rupees in loans funneled to various companies. Specifically, the long-dormant case against CEO Sherchan involved the approval of a massive loan, estimated to be over Rs 1.5 billion, to Janaki Medical College.
This college was reportedly operated by his father-in-law, Harikrishna Bhattchan. Such an action clearly violates the Bank and Financial Institution Act, which prohibits loans to close relatives of a bank’s CEO or directors.
The Role of Digital Forensics in Uncovering the Crime
Despite the initial complaint against Sherchan dating back to 2071 BS (around 2014), the file remained stagnant. The CIB’s sudden reopening of the case strongly suggests the application of sophisticated investigative techniques. This involves deep digital forensic analysis on the bank’s internal records.
Investigators likely scrutinized the Core Banking System (CBS) logs, transaction trails, email communications, and digital approval workflows.
CBS Data Analysis: Forensic teams analyze CBS data for anomalies in loan origination, collateral valuation reports, and subsequent fund disbursement records. These digital trails prove whether loan procedures were bypassed.
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Audit Trail Examination: Every action taken by the arrested officers within the bank’s digital infrastructure leaves an electronic audit trail. CIB used this evidence to establish criminal liability, linking the officers directly to the illicit loan approvals.
Proving Negligence: Analysis of internal digital risk reports and compliance software failures helps the CIB determine if the bank’s own technological safeguards were intentionally ignored or circumvented.
The fact that the loan’s principal or interest was reportedly never repaid to the bank was easily verifiable through CBS financial records.
Urgent Need for Digital Governance and CBS Monitoring
The incident triggers critical questions about the adequacy of digital governance and internal controls in Nepal’s banking sector. Experts emphasize that banks must implement more stringent technological solutions to prevent such colossal financial crimes.
Automated Compliance Checks: Banks must deploy AI-powered tools within their CBS to automatically flag potential conflicts of interest, such as loan applications submitted by known relatives of senior executives.
Enhanced Access Control: Restricting high-value credit approvals to a small, digitally monitored pool of executives can prevent single individuals from abusing authority.
Real-Time Regulatory Reporting: Utilizing technology to share real-time, tamper-proof audit data with regulators like Nepal Rastra Bank (NRB) could lead to quicker intervention before massive losses occur.
The CIB investigation is also looking into a separate fraud complaint related to Prabhu Management Pvt. Ltd., further confirming a broader pattern of potential digital misconduct.
While banking experts, like former Nepal Bankers Association President Sunil KC, caution against impulsive arrests in a sensitive sector, there is widespread consensus that wrongdoers must face the law.
The CIB’s action, supported by NRB, underscores that the law applies universally. The future stability of the financial system hinges on robust digital governance practices that make complex banking offense schemes detectable and preventable.
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