Karnali Development Bank Scandal Case: Hearing Begins in Judges Saru and Chand's Court

The hearing for the Karnali Development Bank scandal case has started in Kathmandu. The proceedings began after the debate on detention could not be completed on Sunday. The hearing was scheduled for Monday as "to be continued."

The joint bench of High Court Tulsipur Nepalgunj, Judges Chandra Bahadur Saru and Punam Singh, is overseeing the case. Statements have already been recorded from UML leader and former bank chairman Pashupati Dayal Mishra, along with Rajendraveer Rai, Ved Prakash Singh Thakuri, and Bhuvan Basnet. Since Sunday, arguments regarding detention have been ongoing.

Fraud Amount and Accusations

Last Thursday, the District Government Attorney Office filed a case demanding recovery of NPR 3.2 billion (3,20,11,54,157) from the accused, including then-chairman Rajendraveer Rai. In this banking scandal, out of 109 defendants, 103 are absconding, and two have died.

The prosecution has demanded:

• Rajendraveer Rai to repay NPR 2.63 billion (2,63,32,16,597) with a fine.

• UML central member and former chairman Pashupati Dayal Mishra to repay NPR 82.46 million (82,46,29,000).

• Former Nepal Rastra Bank employee Bhuvan Basnet to repay NPR 10.89 million (10,89,25,000).

• Former finance department head Ved Prakash Singh Thakuri (also known as Mahadev) to repay NPR 24.63 million (24,63,99,000) with a fine.

Police Investigation Findings

The Central Investigation Bureau (CIB) of Nepal Police concluded that a fraud of NPR 3.2 billion had taken place in the bank. Their investigation report recommended prosecuting 111 individuals.

Out of the accused:

• 4 have been arrested.

• 3 have died.

• 104 are still at large, as mentioned in the charge sheet.

Involvement of Regulatory Officials

The CIB arrested Bhuvan Basnet, a former Nepal Rastra Bank employee, accusing him of helping conceal the fraud. Basnet was involved in monitoring Karnali Development Bank and allegedly submitted a positive report despite the bank's financial troubles.

Investigations revealed that Basnet received NPR 1 million from the bank into his account. His role in hiding irregularities raised suspicions of collusion between the bank’s leadership and regulatory officials.

Background of the Bank

Established in 2066 BS (2009 AD), Karnali Development Bank was the first development bank in the Mid-Western region. However, investigations found that it had been operating irregularly since its inception.

On Poush 10, 2081 BS (December 2024), Nepal Rastra Bank declared the bank as troubled and took over its management. A three-member management committee, led by Deputy Director Tikaram Khatiwada of the Bank and Financial Institutions Regulation Department, was formed to oversee operations starting from Poush 11, 2081 BS.

The case continues as the court examines the evidence and arguments against the accused.