The Central Investigation Bureau (CIB) of Nepal Police is investigating medical entrepreneur and the designated "People's Commander" of the Joint People's Movement Committee for Restoration of Monarchy Durga Prasai on charges of banking fraud.
The CIB initiated the investigation against Prasai for allegedly misusing loans, and the police are currently gathering evidence. The CIB is also investigating Prasai for offenses related to banking fraud and money laundering.
Currently, Prasai is in custody at the Kathmandu District Police Office. He was arrested by the police in Assam, India, on charges of inciting violence in the Tinkune area on March 28, and was brought to Nepal on April 11.
According to CIB Spokesperson and Superintendent of Police Sudhir Raj Shahi, the investigation is focused on loans involving Prasai and his family.
The CIB has found that Prasai, his family, and relatives took loans through 25 institutions. These loans were disbursed on various dates from nine different banks and financial institutions. The police have not yet disclosed the names of these financial institutions.
According to the police, based on details obtained from these financial institutions, Rs 7.25 billion remains unpaid as of mid-October 2024.
SP Shahi stated, “It was found that Prasai had taken such loans until the end of Asadh (mid-July 2024). He has been repaying the interest and principal in very small amounts. After discovering that he was taking loans from one source to repay another, we initiated the investigation.”
The CIB alleges that Prasai and his family misused loans taken in the name of the 25 institutions and engaged in suspicious financial transactions.
The CIB obtained an arrest warrant from the Patan High Court on March 30, 2025 to investigate Prasai.
It is alleged that the loans taken by Prasai and his family-linked firms and companies were not used for their intended purposes and were diverted elsewhere.
Additionally, he is accused of taking loans from one bank to repay loans from another.
SP Shahi said, “Loans taken from banks should only be used for the business, and the business income should be used to repay the loans. However, it was found that Prasai and his associated companies provided large sums as advances.”
Preliminary police investigations also revealed that the repayment deadlines for loans provided to B&C Medical College Teaching Hospital and Research Center Pvt Ltd and Purbanchal Cancer Hospital Pvt Ltd over the past four years have been missed, with irregular repayments of principal and interest.
Prasai is also accused of inflating project costs to secure loans beyond what was necessary.
Suspicious transactions, such as round-tripping (misrepresenting transactions in bank accounts) and related-party transactions in a way where there is conflict of interests, have been identified in accounts held at various banks and financial institutions.
The investigation revealed that Rs 125 million was released in the name of Purbanchal Cancer Hospital from the then-NCC Bank (now Kumari Bank).
Additionally, Rs 50 million was disbursed in the name of Hotel Atrium Pvt Ltd from Nepal Investment Mega Bank Limited, and Rs 100 million was disbursed in the name of UA Medico Supplies and Equipment Pvt Ltd from Goodwill Finance Limited.
However, the police have found that Prasai misused the loans for purposes other than those specified while receiving the loans.
Following allegations of loan misuse, the Nepal Rastra Bank, on February 5, 2025 instructed the CIB to investigate and take action under the Banking Offenses and Punishment Act, 2008 and the Money Laundering Prevention Act, 2008.
Section 8 of the Banking Offenses and Punishment Act prohibits the misuse of loans. The CIB claims that Prasai violated this provision.
The act states, “No one shall misuse the credit facilities availed from a bank or financial institution or let the same be misused by diverting in the purpose other than for which the credit facilities were availed.”
Under this offense, Prasai faces imprisonment proportional to the amount of damage caused, along with confiscation of the amount, fines, and imprisonment as stipulated in the act.
The CIB has not yet disclosed the exact amount of damage caused by Prasai.
If the damage exceeds Rs 1 billion, the CIB can file a case demanding 10 to 12 years of imprisonment. For damages between Rs 500 million and Rs 1 billion, a case can be filed demanding 8 to 10 years of imprisonment. For damages between Rs 100 million and Rs 500 million, the CIB can demand 6 to 8 years of imprisonment.
The Kathmandu District Police Complex is also investigating Prasai for attempted murder, offenses against the state, and organized crime.
