Kathmandu-As concerns are growing over Prabhu Bank’s governance, financial health, and management, promoters sought  the  direct involvement of the Employees’ Provident Fund Organisation  (EPF) on the board.

The bank’s annual general meeting is scheduled for January 14. Prabhu Bank has failed to distribute dividends for the past three years.

Citing this and the bank’s deteriorating condition, promoter shareholders have urged the EPF to send a representative to the board. They argue that the EPF, as a major institutional shareholder, has the expertise to assess and help stabilise the bank.

Promoters have also requested the EPF’s expert team to conduct a detailed review of the bank’s financial position, including compliance with Basel frameworks. However, the EPF has refused to attend board meetings without clear instructions from Nepal Rastra Bank.

Provident Fund Administrator Jitendra Dhital said the EPF had received requests from promoters but would act only after approval from the central bank.
'The EPF would not send any representative to the board without a green signal from NRB, despite being a significant shareholder,' he shared. 

Prabhu Bank’s paid up capital stands at Rs 23.54 billion. Promoters hold 51 percent of the shares, while ordinary shareholders hold 49 percent.

The EPF owns 3.97 percent of promoter shares, making it the third largest promoter shareholder. Yet, it has no representation on the board.

Governance concerns intensified after Chief Executive Officer Ashok Sherchan and other senior officials were detained by the Central Bureau of Investigation on November 30 for investigation. However, they were released on bail after 27 days. If a case is filed at the Special Government Attorney Office, Sherchan will automatically lose his post. Meanwhile Former chairperson and major promoter shareholder Devi Bhattachan is also under investigation.

Fearing rising institutional risk, promoter shareholders have held discussions with EPF leadership, urging closer oversight through board participation. The EPF has maintained distance, citing the need for regulatory direction.

EPF becomes promoter shareholder via multiple mergers 

The EPF became a major stakeholder in Prabhu Bank through a series of mergers rather than direct share purchases. It previously invested in Nepal Development Bank, which later became Grand Bank and then KIST Bank. After KIST Bank merged with Prabhu Bank, those shares transferred to Prabhu. EPF shares in Century Bank also came under Prabhu Bank following the merger.

Currently, Prabhu Bank is chaired by Kishor Jung Karki. Board members include Angirman Singh, Birkha Bahadur Basnet, Ambika Sharma Lamichhane, Raju Poudel, and Ramesh Raj Aryal. Prabhu Group Limited is the largest promoter shareholder with 4.93 percent, followed by Gaurav Agrawal with 4.32 percent. The EPF ranks third, ahead of Nepal Investment Pvt. Ltd. with 3.34 percent. In total, 19 individuals and companies are major promoter shareholders.

Prabhu Bank’s history is rooted in multiple mergers. Prabhu Bikas Bank was formed in July 2013 after the integration of Prabhu Bikas Bank, Prabhu Finance, and Bhaibhav Finance. It later acquired Zenith Finance, Gaurishankar Development Bank, and KIST Bank in 2014. In January 2017, it merged with Grand Bank Nepal. Century Bank, which had earlier absorbed five financial institutions, also merged into Prabhu Bank.

Surging loan loss provisions
Financially, the bank is now in accumulated loss. Nepal Rastra Bank added Rs 4.91 billion in loan loss provisions while approving the audited report for fiscal year 2024-25. Although the bank reported an unaudited profit of Rs 5.44 billion, the figure fell to Rs 870 million after the required provisions. Following the audit, accumulated losses exceeded Rs 2.5 billion.

For three consecutive fiscal years, there has been a large gap between unaudited and audited figures. The provision gap stood at Rs 4.16 billion in 2023-24 and Rs 5.21 billion in 2022-23. These discrepancies have raised serious questions about risk management and governance.

Repeated audit adjustments, ongoing investigations, and mounting losses have reinforced concerns about weak governance at Prabhu Bank. Promoters want the EPF on the board to strengthen oversight. The EPF, however, has said it will wait for explicit direction from the central bank before taking any role.