KATHMANDU: Police have arrested Pashupati Dayal Mishra, former chairman of Karnali Development Bank, from Nepalgunj in connection with a large-scale banking fraud case.

Mishra served as chairperson of the bank from 2009 to 2018.

According to DSP Deepak Paatali of Banke District Police Office, Mishra was apprehended by a Central Investigation Bureau (CIB) team, which is also leading the investigation.

With this, the total number of arrests in the case has reached three. Earlier, the then finance chief Dev Prakash Singh Thakuri and founding chairperson Rajendra Bir Raya were also taken into custody.

The CIB team, led by DSP Dan Bahadur Thapa, is currently stationed in Banke and continuing its investigation.

The suspects are being investigated under the Banking Offense and Punishment Act, in coordination with Nepal Rastra Bank.

The fraud reportedly involves misappropriation of around Rs 2.5 billion.

Founded in 2003, Karnali Development Bank was led for nearly 15 years by Raya, who holds around 80% of its founding shares.

Raya also served as executive chairman and CEO during that period.