Kathmandu. Nepal's banking sector has recently been rocked by several high-profile corruption and embezzlement scandals involving major commercial and development banks. Investigations by the Central Investigation Bureau (CIB) and the Commission for the Investigation of Abuse of Authority (CIAA) have led to the arrests of top executives and the uncovering of billions in misappropriated funds as of early 2026. 

Banks corruption  Scandals
Karnali Development Bank Embezzlement (NPR 3.2 Billion)

The Case: In July 2025, a massive fraud of NPR 3.2 billion was uncovered at Karnali Development Bank. The Details: Top management reportedly created fake loan accounts, forged documents, and diverted funds for years.

Key Arrests: 111 individuals were implicated, including founding chairman Rajendra Bir Raya and former chairman Pashupati Dayal Mishra.

Regulatory Collusion: A former Nepal Rastra Bank (NRB) employee, Bhuvan Basnet, was arrested for allegedly helping conceal the fraud by submitting positive monitoring reports despite the bank's troubles.

Prabhu Bank and Prabhu Group Fraud (NPR 1 Billion+)
The Case: In late 2025, several top officials of Prabhu Bank were arrested in connection with a major fraud involving the Prabhu Group.

The Details: Investigations center on unauthorized misuse of bank assets and the disbursement of billions in "pre-funding" for remittance without collecting interest, causing losses exceeding NPR 1 billion.

Key Arrests: CEO Ashok Sherchan, Deputy CEO Mani Ram Pokhrel, and Chief Credit Officer Riwas Shrestha were taken into custody. Prabhu Group chairman Deviprakash Bhattachan was also arrested.

Nepal Bank Limited Missing Funds (NPR 20.4 Billion Allegation)
The Case: A shareholder complaint filed in June 2025 alleged that NPR 20.4 billion went "missing" from Nepal Bank Limited under the heading of SME loans. The complaint points to massive inconsistencies in loan disbursement data from 2018.

Bank Response: Nepal Bank has officially refuted these reports, calling them "misleading and baseless". Bribe Case: Separately, the CIAA filed a corruption case against former chairman Chandra Bahadur Adhikari for allegedly taking a bribe of NPR 1.9 million.

Century Bank (Now Prabhu Bank) Loan Scam
The Case: Before its merger with Prabhu Bank, Century Bank officials were accused of providing NPR 2.11 billion in loans with inadequate collateral.

Key Arrests: Former CEOs Manoj Neupane and Tulasi Gautam were among those arrested for their roles in these transactions.

Sunrise Bank and Patanjali Land Deal
The Case: In June 2025, the CIAA indicted 93 individuals, including former Sunrise Bank executives, over illegal land subdivision and transfers involving Patanjali Ayurved. The case involves the illegal sale of land originally purchased under institutional exemptions, causing an estimated loss of NPR 1.85 billion to the state.

Citizens Bank's corruption case: 2 Million recovered from each employees and 9 are suspended
In the Citizens Bank scam, the bank has been found to have recovered Rs 20-20 lakh each from various employees on the condition of not filing a police report. It has been found that the bank has collected Rs 20-20 lakh from various employees, saying that it will file a police report only against Rozi Kandel who paid Rs 20 lakh, and against those who did not pay the money.

The bank has already suspended 9 people for their involvement in the scam. However, it has been found that the bank has recovered money from employees without investigating the 9 people and without determining who is guilty. Although there was irregularity in the bank scam at various stages and the user IDs of many employees were used, the bank has filed a police report only against Rozi Kandel.

It has been found that the bank has collected Rs 20-20 lakh from various employees, saying that it will file a complaint only against Rosie Kandel, who paid Rs 20 lakh, and against those who did not pay the money. The bank, however, claims that it has filed a complaint only against Kandel because he took responsibility for everything. However, legally, this cannot be done.

Recently, a scam of Rs 5 crore has taken place at Citizens Bank. Without informing them about the depositors' money, the employees themselves have taken loans against it. Despite an agreement not to bring this matter to the public and to settle it internally, the bank has reached the police, saying that Rosie Kandel did not pay all the money on time. Along with this, two major scams have come to light at Citizens Bank in the last one year. Earlier, nearly Rs 3 crore had disappeared from F1 Soft's account at Citizens Bank.

The Kandel family has filed a case against the bank's CEO and others, alleging that they were not allowed to read the paper and that they went to the police against their agreement.