Shanker Group Chairman Arrested Again as Banking Loan Misuse Case Moves to Court

Kathmandu: Shanker Group Chairman Shankarlal Agrawal has been arrested for the second time in less than three months, this time in connection with an alleged banking offence involving the misuse of corporate loans. Nepal Police's Central Investigation Bureau (CIB) detained Agrawal from Dillibazar, Kathmandu, on Wednesday and presented him before the Patan High Court, where a banking offence case against him is already under judicial consideration.

Although this is Agrawal's second arrest in a short period, the legal grounds are different from the earlier case. In March, he was taken into custody during an investigation into suspected money laundering linked to businessman Deepak Bhatt. After recording his statement, authorities released him on a recognizance bond. The latest arrest stems from a separate banking offence case filed after investigators completed their examination of financial transactions involving bank loans.

The prosecution alleges that Jagdamba Steels obtained loans from multiple commercial banks for legitimate business purposes, including industrial operations, the purchase of raw materials and working capital requirements. Investigators, however, claim that a significant portion of those funds was diverted to transactions unrelated to the approved lending purpose. According to the charge sheet, approximately Rs 421.4 million of the borrowed amount was allegedly used outside the conditions under which the loans had been sanctioned.

Investigators further claim that more than Rs 545 million was transferred from Jagdamba Steels to businessman Deepak Bhatt through a series of financial transactions. Authorities allege that part of the money was initially described as an advance payment for land acquisition but was later routed through Infinity Holdings before ultimately being invested in the purchase of founder shares of Himalayan Reinsurance. Prosecutors argue that no sufficient evidence has been found to establish that the claimed land transaction actually took place.

One transaction cited in the investigation has drawn particular attention. According to the prosecution, Rs 160 million was transferred from Jagdamba Steels to Bhatt's personal account on the very day the company received bank loans. Investigators state that the company's own operating income at the time was only around Rs 200,000, while nearly the entire transferred amount originated from borrowed funds. This sequence of transactions forms one of the central pieces of evidence supporting the allegation that the loans were used for purposes beyond those approved by lending institutions.

The banking offence case has been filed against Shankarlal Agrawal, Sahil Agrawal, Sulabh Agrawal and businessman Deepak Bhatt. While Bhatt and other co-defendants have been presented as principal accused in the prosecution's case, investigators have named Shankarlal Agrawal based on his alleged involvement in company banking operations, cheque authorisations and fund transfers. Prosecutors argue that he played a supporting role in the disputed financial transactions, though the extent of his individual criminal liability remains subject to judicial examination.

The case highlights growing regulatory scrutiny over the use of corporate borrowing in Nepal's banking sector. Loans approved for industrial production and working capital are generally subject to strict end-use conditions because they are intended to support productive economic activity. If borrowed funds are redirected into unrelated investments or speculative assets, regulators argue that such practices increase credit risk, undermine banking discipline and weaken confidence in financial oversight. The investigation reflects broader efforts by Nepal Rastra Bank and law enforcement agencies to ensure that institutional borrowing is used only for its sanctioned purpose.

Under Nepal's Banking Offence and Punishment Act, offences involving losses between Rs 100 million and Rs 500 million may carry prison sentences ranging from six to eight years, in addition to recovery of the disputed amount and financial penalties. Prosecutors have sought the maximum legal punishment available based on the scale of the alleged misuse.

The Patan High Court will now determine whether Agrawal should remain in judicial custody, be released on bail or under other conditions while the trial proceeds. The court will evaluate documentary evidence, witness testimony and arguments presented by both the prosecution and defence before making further procedural decisions.

The allegations against Agrawal and the other defendants remain the claims of investigators and prosecutors. Under Nepal's legal system, all accused individuals are presumed innocent unless and until their guilt is established by a final court verdict.