KATHMANDU: The government’s actions against Shanker Group-one of Nepal’s largest conglomerates by job, turnover, taxation footprint, and bank exposure-has triggered panic across the business sector and shaken investor confidence, with the stock market witnessing a decline amid rising uncertainty.

Group chairman Shanker Agrawal has been taken into custody in a money laundering case, while business associate Deepak Bhatt is also under investigation.

The development has raised alarm within the banking sector due to the group’s massive financial exposure. Bankers estimate that companies affiliated with the group have borrowed close to Rs 100 billion, making it one of the largest single-group borrowers in the country.

“This is a systemically significant group with huge loan exposure, tax contributions, job, and financial linkages,” said a senior banker to Nepal News. “Any disruption could have ripple effects on banking stability, job markets, taxation, especially at a time when construction-linked industries are already under stress.”

The group’s flagship industrial arm, Jagadamba Steel, alone carries loans worth over Rs 30 billion. Jagdamba Steels Limited is Nepal’s largest steel producer and one of the biggest steel manufacturers in South Asia. Its turnover, which once reached around Rs 50 billion, has declined to about Rs 30 billion in recent years due to a slowdown in the construction sector.

Shankar Group is Nepal’s largest investor in the cement industry and the country’s top manufacturer, with major plants including Shaurya (4000 TPD clinker), Riddhi Siddhi (3000 TPD), Shubha Shree Jagdamba (2400 TPD), and Jagdamba (1200 TPD). Group is investing billions in hydropower, including Upper Balephi (36 MW), Upper Balephi (46 MW), and Lower Modi (20 MW), with a combined annual generation of over 590 GWh.

In addition, the group has major investments in Jagadamba Automobiles, the Hilton Hotel, Himalayan Re-Insurance, Union Life Insurance, Jagdamba Enterprises, Jagdamba Flour and Agro, Jagdamba Mobiles, Jagdamba AlcoBev, Jagdamba Overseas and many more.

The five-star hotel project, financed by around Rs 5 billion in bank loans, was damaged during the September 09, 2025 Gen-Z protests and is currently facing uncertainty due to target its top owners by the government.

With annual turnover exceeding over Rs 11,000 crores (about $1 billion) and significant contributions in taxes, bank interest payments, and about 20,000 employment, the Shanker Group is considered one of the largest pillars of Nepal’s private sector. Its sudden legal troubles and arrests have created a sense of unease across the business community, with fears of tightening credit conditions and declining investor sentiment.

The group operates more than 40 companies across 14 sectors, including mining, cement, steel, synthetics, textiles, FMCG, automobiles, services, real estate, hospitality, investments, retail, trading, and representation-making it one of the most diversified conglomerates in Nepal.

The origins of the group trace back to Rawat Mal Golyan, who arrived in Nepal from Myanmar in the 1960s and initially established a button factory. Although unsuccessful, it marked the beginning of a business journey that later evolved into a multi-industry empire.

His son, Shanker Lal Agrawal, formally established the Shanker Group in 1979, expanding from trading into manufacturing. The group’s industrial expansion accelerated with the establishment of Jagadamba Steel in 1994 and Jagadamba Cement in 2001, followed by ventures in synthetics, pipes, and steel products.

The group later diversified into automobiles, becoming a key distributor of international brands including TVS motorcycles and Proton car, and expanded into insurance, capital markets, hydropower, and hospitality. It has also partnered in major projects such as Riddhi Siddhi Cement and is developed a luxury hotel under the global Hilton Hotels & Resorts brand in Kathmandu.

The government’s action against the group’s top leadership has triggered panic among thousands of employees, as well as within the banking sector exposed to the conglomerate.

Bankers warn that the implications could extend far beyond a single group. “A harsh crackdown on one of the country’s top business houses- especially on the basis of unproven investigations-risks destabilizing the broader economic environment,” said a senior banker, speaking on condition of anonymity to Nepal News. “It raises concerns over taxation, capital flight, job security, and overall market confidence.”

Another banker echoed similar concerns, suggesting the case may be linked to alleged misuse of demat accounts by brokers rather than systemic wrongdoing by the group itself. “If the government is seen as targeting large business groups in a revenge-driven manner, the consequences could be devastating for the job market, the share market, and the overall business climate,” the banker said.

They also pointed out that several of the group’s major projects-including hospitality venture Hilton have already been under pressure following damage during Gen-Z protests, with insurance claims yet to be settled. “At a time when businesses are still recovering, the government should be facilitating stability, not adding further pressure,” the banker added.

As investigations continue, the crackdown on one of Nepal’s largest turnover-based business groups has raised broader questions about economic stability, regulatory risk, and the future direction of private sector confidence.